This report is read as follows:
The company's performance in the first half of 2022 is in line with expectations. The export business hedged the impact of the domestic epidemic, the new project was launched in 22-23, and the performance of titanium alloy products exceeded expectations, we expect the company to enter a stage of rapid development.
Summary:
Maintain the "overweight" rating. In the first half of 2022, the company achieved operating income of 2.673 billion yuan, an increase of 2% over the same period last year, and a net profit of 295 million yuan, an increase of 1.6% over the same period last year. Taking into account the impact of the epidemic on the second quarter results, the company's net profit from 2022 to 2024 is forecast to be 7.34,8.66 and 1.001 billion yuan (the original 8.23,9.47 and 1.08 billion yuan). Taking into account the adjustment of the valuation of the company in the tool and die steel industry and the company's leading position, with reference to similar companies, the company is valued at 20 times PE in 2022, lowering the company's target price to HK $5.90 (originally HK $7.58) and maintaining the "overweight" rating.
Exports hedged the adverse effects of the epidemic, operating steadily in the first half of the year. In the first half of 2022, the impact of the domestic epidemic led to a decline in demand and good overseas demand, and the company actively responded to and increased exports. In the first half of the year, the export value of die steel and high-speed steel was 9.09 yuan and 313 million yuan respectively, up 93% and 111% respectively over the same period last year. The rise in exports effectively hedged the adverse effects of the epidemic, and the overall operation of the company was sound.
At present, the domestic epidemic has been alleviated, we expect downstream demand will gradually recover, the company's profitability will gradually increase.
Titanium alloy products are in great demand and have a broad space in the future. The company has gradually expanded the downstream application scene of titanium alloy, and the delivery products have been transformed from blank to wire and other deep-processed products, and the titanium alloy materials for glasses and 3C industry have entered a stable supply stage. In the first half of 22, the company realized revenue of 165 million yuan from titanium products, an increase of 56.6% over the same period last year, while gross profit margin increased by 3.4% to 20.2%. We believe that the upgrading of the company's titanium product structure will continue, the downstream application scene will gradually open, and there will be a broad space for the growth of titanium products in the future.
Powder metallurgy continues to advance, and the Thai project is gradually put into production. The company's powder metallurgy production capacity of 3000 tons will continue to be built in 2022, and it is expected that the company's powder metallurgy capacity will reach 5000 tons in 23 years. We believe that the company's advanced powder metallurgy technology and deep barriers, in addition to powder metallurgy tool steel, powder tap production line will also continue to promote, the company's powder metallurgy market will continue to open up, driving the company's product structure.
The monthly output of the company's Thai factory exceeded 4 million pieces at the end of the 21st year, and the cutting tool production capacity of the Thai tool factory will rise to 100 million units in 22 years. With the commissioning of the company's production capacity, the company's performance will gradually increase.
Risk hint: the production progress of new production capacity is not as expected.