This report is read as follows:
Due to the epidemic and cost drag, the company's performance in the first half of 2022 was lower than expected. At present, the demand for wind power is rising rapidly, while the price of scrap at the cost side has fallen more. We expect the company's profitability to increase and its performance to be released gradually.
Main points of investment:
Maintain the "overweight" rating. In the first half of 2022, the company achieved revenue of 1.578 billion yuan, up 4.74% from the same period last year, and realized a net profit of 58 million yuan, down 61.54% from the same period last year. The epidemic affected the company's shipments, and the company's performance in the first half of the year was lower than expected. Taking into account the impact of the epidemic and costs on the company in the second quarter, the company's EPS in 2022-24 is estimated to be 0.93max 1.82max 1.9 yuan (formerly 1.9pm 2.43pm 2.55 yuan), and the corresponding return net profit is 1.99exergy 3.91max 407 million yuan. Considering that the sharp increase in the bidding volume of wind power from January to August in 22 years has brought about an improvement in demand in the second half of the year and 23 years, referring to similar companies, the company is valued at 45 times PE in 2022, raising the company's target price to 41.85 yuan (formerly 37.66 yuan) and maintaining the "overweight" rating.
The cost pressure gradually alleviated and the price of castings increased steadily. Since the third quarter of 2021, due to the good demand of the iron and steel industry, scrap prices continue to be strong, the company is under great cost pressure. Since June 22, scrap prices have weakened and the company's cost pressure has gradually eased. The demand for wind power in the superimposed downstream is strong, and the bidding price of wind power has gradually increased since May 22, leading to a rebound in casting prices. We expect that the company's profitability will gradually increase in the second half of the year against the background of simultaneous improvement in costs and demand.
The wind power casting project has landed steadily, and the gearbox parts will further optimize the company's product structure. The second phase of the company's wind power castings will be completed at the end of the first quarter. After the second phase and finishing production, the company will have a strong competitiveness in the sea breeze casting market above 5.5MW. The company's gearbox parts project is progressing steadily, and it is expected that the production capacity will reach 84000 pieces after completion, and the company's product structure and profitability will be further improved.
There is a strong demand for wind power downstream of the company. From January to August in 2022, the accumulative 52.1GW of land wind and the 13.2GW of sea breeze in China have exceeded 2019. Under the background of the epidemic situation affecting the construction in the first half of the year, the construction of wind power is expected to accelerate in the second half of the year, and the downstream demand of the company's castings is good.
Risk hint: orders for wind power castings are lower than expected; costs rise sharply.