This report is read as follows:
The company reported lower-than-expected results in three quarters in 2022. The company's main downstream powder metallurgy demand slows down, dragging down the company's performance.
The company's new category has gradually entered the delivery stage, 23 years of the company's fund-raising projects have been put into production, and the company's performance will be gradually released.
Main points of investment:
Maintain the "overweight" rating. In the first three quarters of 2022, the company realized revenue of 293 million yuan, down 25.94% from the same period last year, and realized net profit of 70 million yuan, up 1.36% from the same period last year, and the company's performance was slightly lower than expected.
Considering the weak downstream demand, the EPS of the downgrade company in 2022-24 is estimated to be 0.95 pound 1.56 pound 2.42 yuan (the original 1.25 pound 1.82 plus 2.83 yuan), and the corresponding return net profit is 0.95 pound 1.56 pound 242 million. Taking into account the industry comparable company valuation adjustment, with reference to similar companies, give the company a valuation of 35 times PE in 22 years, lower the company's target price to 33.35 yuan (formerly 43.75 yuan), and maintain the "overweight" rating.
The weak demand for powder metallurgy is a drag on the company's performance. Since the third quarter, due to the weak demand for powder metallurgy downstream, the demand for pure iron powder is weak, and the company's revenue and return net profit have declined in the third quarter.
The downstream of powder metallurgy in China is mainly consumer electronics and automobiles, and the fourth quarter is generally the traditional peak season of consumer electronics. we expect that the demand for powder metallurgy will gradually pick up and the company's profitability will gradually return.
The commissioning of the fund-raising project will lead to a rapid increase in output in 23 years. The company's current production capacity is about 80,000 tons, with a total capacity of 70,000 tons for investment projects and 50,000 tons for reconstruction. The total production capacity of 120000 tons will be gradually put into production in 2023, and the company's output in 23 years has increased greatly. It is expected that with the rapid increase of the company's iron-based powder production capacity, the company's performance will be released steadily.
To enter the field of new energy, there is a broad space for long-term development. In January and June of 22, the company announced investment in 2.2 pieces of new energy equipment key components and 20,000 tons of metal soft magnetic powder projects, including wind power spindles and metal soft magnetic powder for photovoltaic inverters. The demand growth rate of wind power, pumping energy storage and photovoltaic industry remains high. We believe that the company's expansion in the new energy field has opened up the company's future growth space, and the new energy field will become the company's second growth curve.
Risk hint: new production capacity is not as expected, scrap prices rise sharply, market development risk