Event: on the evening of October 25, the company released its third quarterly report of 2022
The results in the third quarter were lower than expected, with 2022Q3 net profit down 16.6% from the same period last year, and profitability under pressure. In the first three quarters of 2022, the company achieved revenue of 1.95 billion yuan, an increase of 2.8% compared with the same period last year; and the net profit of returning home was 330 million yuan, down 16.6% from the same period last year. In the first three quarters of 2022, the gross profit margin and net profit margin of sales were 29.1% and 17.6% respectively, down 2.29% and 3.49pct from the same period last year.
2022Q3 achieved revenue of 690 million yuan in a single quarter, an increase of 8% over the same period last year, while its net profit was 90 million yuan, down 59.4% from the same period last year. Q3 single-quarter sales gross profit margin and net sales profit margin were 25% and 13.5% respectively, down 12.07% and 21.65pct from the same period last year. From the revenue side, the year-on-year slowdown in revenue growth may be due to the decline in spindle bearing shipments, the impact of the epidemic on the start of wind farms and the high base in the same period. From the profit point of view, the decline in the company's profitability may be due to 1) the decline in product prices: in order to protect the market share, the price of spindle bearings has dropped; 2) the cost has increased: the technical transformation of the subsidiary Shengjiu forgings and the external mining of some forgings have led to an increase in costs; 3) the adjustment of product structure:
Shipments of spindle bearings with higher gross profit margin decreased compared with the same period last year, including small shipments of self-aligning rollers and single-row tapered roller bearings, which were lower than expected. With the gradual release of forgings production capacity in the future, profitability is expected to pick up.
The company signed a 1.32 billion procurement contract with Mingyang Intelligence, and the future cooperation with Mingyang Intelligence will be closer. On September 6, 2022, the company and Mingyang Intelligence signed a "Strategic Cooperation Framework Agreement". In the future, the two sides will carry out cooperation in the design, development, development and application of spindle bearings and yaw pitch bearings. The company is a long-term cooperative supplier of Mingyang intelligent spindle bearings, even if it changes the fan technology in the future, the two sides will still maintain a close cooperative relationship.
On September 27, 2022, the company signed a procurement contract of not less than 1.32 billion yuan for wind turbine parts with Mingyang Intelligence. The smooth implementation of the contract will have a positive impact on the company's performance in 2023 and increase its market share.
The forward-looking layout of wind power gearbox bearing capacity is expected to provide the company with upward elasticity. The company has issued 1.21 billion convertible bonds to layout gearbox bearings and precision components, including bearings, gears and other components. Priority placement to the original shareholders of the company, with a placement proportion of 64.92%. It is estimated that the project will produce 57500 sets of precision parts of gearbox by 2026. It is estimated that the operating income is 1.535 billion yuan / year, the gross profit margin is about 35%, and the net profit rate is about 18%, which is higher than the current profit level, and is expected to improve the profitability of the company.
During the "14th five-year Plan" period, the new installed capacity of wind power is expected to exceed expectations, and the company will continue to benefit from the industry. According to the previous research and report "parity era, selected stocks" data, the average annual installed capacity of wind power during the 14th five-year Plan can reach 64GW. 2022-2025 newly installed CAGR=17%; offshore wind power averaged 12GW 2022-2025 new installed CAGR=44%. The company will benefit from large-scale units and offshore wind power brought by large-megawatt bearing demand, the market share is expected to continue to increase.
Profit forecast and valuation
Net profit from 2022 to 2024 is expected to be 4.8,7.50 and 960 million yuan respectively, down 7 per cent from the same period last year, up 57 per cent and 29 per cent respectively, corresponding to 70, 44 and 35 times PE, maintaining a "buy" rating.
Risk Tips:
1) the risk of deterioration of the competition pattern; 2) the price risk of raw materials; 3) the installation of wind power is not as expected.