Event
Tiangong shares signed a "sales contract" with the same company in the aforementioned announcement.
Tiangong shares, a subsidiary of the company, disclosed the announcement on signing a Major operating contract on December 2, 2022 (announcement No.: 2022). Tiangong shares recently signed a "sales contract" as the supply side with the same company in the above announcement (hereinafter referred to as the "demand side"). The total amount of this contract exceeds 35% of the company's audited operating income in 2021. The contract stipulates that Tiangong Co., Ltd. will provide titanium alloy disk materials and related services to the demand side.
Brief comment
The high-end of the material plate advances steadily, and the products import high-end materials to the standard.
The company's tool steel materials have been committed to high-end, over the past 15 years, the company has gradually used high-alloy materials instead of low-alloy materials, and the gross profit margin has been rising for 6 consecutive years. Recently, powder metallurgy and 7000 tons of fast forging projects have raised the company's products to the level of imported high-end materials. After the landing of the second phase of powder metallurgy, the production capacity will reach 5000 tons, the historical price will be more than 140000, and the gross profit margin will reach about 50%. After the landing of the 7000-ton quick forging project, it can produce large-size modules for integrated die-casting industry. at present, the price of imported large-size modules is about 120000. Since the fourth quarter, manufacturing demand has gradually recovered, providing a good market environment for the company's high-end volume, and the company's gross profit margin is expected to continue to rise.
Cutting tool projects fall to the ground intensively and are expected to achieve substantial growth in 2023.
In 2023, the company's cemented carbide, powder tap and Thailand tool factory phase II of the three projects will usher in the production period. The cemented carbide project equipment of the company is basically installed and debugged at present, and after the full sale of bars, blades and cutting tools, it is expected to contribute 300 million business income.
The powder tap project currently has a production capacity of 5 million units, which is the result of the deep processing of powder metallurgy materials of the company. The second phase of the Thai tool factory of the company has also gradually entered the factory inspection stage, with strong profitability in the first phase. After the landing of the second phase, the production, marketing and performance of the Thai tool factory will double.
Titanium alloy plate has successively signed major sales contracts, gradually becoming the company's new growth pole.
The company's titanium alloy materials have achieved a major breakthrough in the 3C market and have successively signed major sales contracts. The amount of the two contracts exceeded 30% and 35% of the company's audited operating income in 2021, respectively. Greatly increase the company's revenue, and gradually become the company's new growth pole.
Profit forecast and investment suggestions: the high-end route of the company's tool steel materials is carried out smoothly, the cutting tool plate projects are densely landed, and titanium alloy has achieved a major breakthrough in sales channels. With the concerted efforts of the three major business sectors, the company is expected to achieve substantial growth. The company is expected to achieve a "buy" rating of 550 million, 970 million and 1.17 billion respectively in 2022-2024, with a corresponding PE of 11.7x, 6.7x and 5.5x, respectively.
