The company reported a 17% year-on-year decline in profits in the first three quarters of 2022. The company's profitability is under pressure in stages, but the company's bearing orders are full, and the profit margin still has room to repair; maintain the overweight rating.
Support the main points of rating
The company's profit in the first three quarters of 2022 decreased by 16.56% compared with the same period last year: the company released the third quarterly report of 2022, making a profit of 334 million yuan in the first three quarters, down 16.56% from the same period last year; deducting 332 million yuan from non-profit, down 11.55% from the same period last year. Among them, 2022Q3 made a profit of 91.25 million yuan, which decreased by 59.38% and 36.96% respectively compared with the same month; the non-profit was deducted by 88.67 million yuan and decreased by 23.74% by 42.01% compared with the same month.
Phased pressure on profitability: in the first three quarters of 2022, the company achieved a sales gross profit margin of 29.09%, down 2.29 percentage points from the same period last year; of which the gross sales margin in the third quarter was 25.03%, down 12.07 percentage points from the previous quarter. We believe that the company's profitability is under short-term pressure or mainly due to changes in scheduling and shipping structure, and its profitability has maintained a good trend for a long time. According to Wind data, the price of 42CrMo special steel, the company's main raw material, fell from a high of 6300 yuan / ton this year to 5080 yuan / ton on October 28, and we expect the company's profit margin to increase gradually.
Signed a framework agreement with Mingyang Intelligent, wind power bearing orders are full: in September 2022, the company and Mingyang Intelligent signed the "2023 frame Purchasing contract for Wind Turbine parts". It is agreed that Mingyang Intelligent will purchase 1900 sets of spindle bearings and 3000 sets of yaw pitch bearings from the company in 2023, with an annual transaction volume of not less than 1.32 billion yuan, accounting for 53.29% of the total revenue in 2021. We believe that the company actively layout a variety of bearing technology routes, rapid progress in the domestic replacement of large megawatt bearings, full orders on hand, is expected to gradually cash in for performance improvement.
Convertible bonds have been issued and listed on the market, raising funds for the construction of gearbox bearings: the company has issued convertible bonds to raise a total of 1.21 billion yuan, of which 865 million yuan is used to invest in gearbox bearings and precision parts projects. the project is expected to complete all the construction work by the end of 2024. after completion, it is expected to further enrich the company's product types and open more market space for the company.
Valuation
Under the current equity, combined with the company's annual report and industry demand, we adjust the company's earnings per share forecast for 2022-2024 to 1.63 soybean 2.43 pounds 3.63 yuan (the original forecast for 2022-2024 is 2.08 pounds 2.86 pounds 3.93 yuan), corresponding to a price-earnings ratio of 46.0 pounds, 30.9 pounds, 20.7 times, and maintain the overweight rating.
Main risks faced by rating
The expansion of new customers is not as expected; the price increase of raw materials is higher than expected; the price competition is higher than expected; the large-scale reduction is not as expected; the development of new products is not as expected; the demand for wind power is not as expected; the impact of the epidemic is higher than expected.