Liande Co., Ltd. is a leading supplier of castings in the compressor field, with outstanding profitability and stable growth:
The company has ploughed high-precision mechanical parts and precision cavity mold products for 20 years, mainly supporting compressors, construction machinery, energy equipment, food machinery, injection molding machines and other industries. it has competitive advantages such as leading technology, stable product quality and efficient comprehensive management. From 2016 to 2021, the company's operating income increased from 424 million yuan to 799 million yuan, with CAGR of 13.53%; net profit from 74 million yuan to 161 million yuan, CAGR of 16.70%, gross profit of 44.0%, 43.2% and 34.3% respectively, and net profit of 24.7%, 25.0% and 20.1% respectively. In the context of rising raw material prices, profitability is still outstanding. In the future, with the release of production capacity of fund-raising projects, the company's business scale is expected to continue to expand, and with the relief of raw material cost pressure, profitability is expected to be repaired.
The status of the industrial chain determines high profits: the status of domestic suppliers in the industrial chain has a rising trend, on the one hand, overseas customers gradually transfer the supply chain to China for quality and cost considerations, and on the other hand, the domestic supply is stable. Overseas customers passively switch to China. In this context, Liande is deeply bound to overseas high-quality customers to achieve a higher level of profitability. ① customer resources quality: the company has accumulated a large number of high-quality global top 500 customer resources, commercial compressor field of global leading manufacturers including Johnson Control, Ingersoll Rand, Kelly Air conditioning, McVille, as well as the global leader in construction machinery Caterpillar Inc, has been awarded excellent suppliers by core customers for many years. ② has high customer stickiness: the company has outstanding product quality and R & D capabilities, meets customers' stringent quality control and supply chain management requirements, provides customized products and services, deeply participates in customer new product development, provides product advice in casting, and new product components often have a unique supply period.
Multi-dimensional expansion to ensure steady growth: ① capacity expansion helps existing business customers deepen cooperation, while realizing new areas of expansion: the company's deep layout of casting and machining integrated production capacity, fund-raising project Haining technical transformation project and Deqing integrated project is expected to break the capacity bottleneck, comprehensive open investor exchange and fund-raising project capacity release rhythm, we expect 2021-2024 The production capacity of finished products processed by public drivers is 4, 5, 6 and 100000 tons respectively. The new production capacity will enhance the supply capacity of the company's large castings, and the coverage of product categories will be increased. Customers of existing compressors and construction machinery are expected to continue to deepen cooperation and expand new areas of large castings for wind power. ② investment Liyuan hydraulic, enhance business, customer cooperation, is expected to create a new growth power: the company invests Liyuan hydraulic in 2021, the company has upstream casting raw materials, downstream customers (Caterpillar) advantages, Liyuan hydraulic has construction machinery hydraulic parts technology research and development, production background, the two empower each other, business cooperation is high, the company is expected to inject new impetus for growth through the layout of high-tech value-added precision components.
Investment suggestion: we estimate that the company's income from 2022 to 2024 will be 11.4,14.1 and 2.02 billion yuan respectively, with year-on-year growth rates of 43.2%, 23.6% and 43.1% respectively, and net profit of 2.35,3.05 and 431 million yuan respectively, with year-on-year growth rates of 46.3%, 29.8% and 41.2% respectively. For the first time, it has an investment rating of Buy-A, with a six-month target price of 31.75 yuan, equivalent to a dynamic price-to-earnings ratio of 25 times in 2023.
Risk tips: raw material prices fluctuate sharply; macroeconomic fluctuations lead to a reduction in downstream terminal demand; capacity expansion is not as expected; important customers are lost; acquisitions and shareholding companies do not carry out business as expected; estimates are not as expected.