High-end special steel and wind power parts rookie: the vast number of special materials was established in 2006, located in Zhangjiagang City, Jiangsu Province, mainly engaged in high-end special steel materials and wind power parts. In October 2022, the company's convertible bond project was approved by the CSRC, and 1.15 billion yuan of the funds raised will be used for large-scale high-end equipment core precision parts projects to build the production capacity of 84000 core precision parts of wind power gearboxes.
Traditional business benefits from falling steel prices: the company's traditional business includes medium and high-end special steel products such as gear steel, steel castings and superalloys, which are used in aviation, oil and other industries, and will have a smelting capacity of 455000 tons by the end of 2022. The main raw materials of the products are pig iron and scrap steel. since the second half of 2022, the prices of the above raw materials have been reduced by 700-1100 yuan per ton. it is expected that the traditional business profits will be improved due to the low steel prices in the future. In addition, the production capacity of the subsidiary Dongqi increased to 30,000 tons of steel castings at the end of 2021, which significantly improved its profitability.
The amount of wind power castings can be expected: the company's wind power casting products include casting parts such as wheels and bases in wind turbines. The production capacity reached 185000 tons by the end of 2022. The wind power industry has ushered in an upward cycle, and the bidding volume of wind power this year is expected to exceed 100GW. The large-scale trend of the wind power industry has been determined, the proportion of offshore large-scale wind power has increased, and the company has focused on the racetrack of large-scale wind power castings above 5.5MW. At present, the gross profit margin and unit price of products are in the industry leading level, and the amount of large-scale wind power castings will increase.
The core components of wind power gearbox open the second curve of performance growth: wind power bidding forces the whole machine manufacturers to reduce costs and promote large-scale wind power. The permeability of doubly fed and semi-direct drive technology with gearbox is increasing in large fans and offshore fans. Large fans need to be equipped with high torque density gearbox, which currently depends on imports; high-end gearbox core parts-large precision wind power gears have high production technology and capital barriers, and there is no large-scale production line in China. Aiming at the gap in the domestic high-precision large-scale wind power gear market, the company takes the lead in introducing foreign advanced intelligent production equipment. The production line is expected to be completed in 2023 and reach production in 2024, when it will contribute 485 million yuan in net profit per year.
Profit forecast and investment rating: we estimate that from 2022 to 2024, the company's operating income will be RMB 32.4 million, with a year-on-year growth rate of 18.2%, 69.5% and 15.4%, respectively. The net profit of homing home will be RMB 1.4pm, with a growth rate of-20.1%, 181.8% and 77.5%, respectively, and the corresponding PE will be 49.5%, 17.6 and 9.9x respectively. Compared with the listed companies engaged in the production of wind power parts such as bearings and towers, the valuation of the company in 23-24 is much lower than the industry average. Considering the high barrier and huge gap of the core components of the wind power gearbox, it can give the same valuation level as the wind power bearing, that is, about 20 times the valuation in 24 years, corresponding to the target market value of about 14.1 billion yuan, so the company's "buy" rating can be maintained.
Risk tips: raw material price fluctuations; wind power industry policy is not as expected; the company's production expansion speed is not as expected.