Introduction to this report:
As a domestic wind power leader, the company integrates the industrial chain upstream, reduces costs and increases efficiency, and promotes technological improvements to achieve breakthroughs in technical barriers; downstream was affected by the high bidding volume of wind power in '22. Overseas supply is expected to be tight, and the company is expected to rise sharply in volume and price.
Key points of investment:
Investment advice: As a leading domestic wind power bearing leader, the company buys forging subsidiaries upstream and promotes technical reform to create competitive advantages in technology and cost. Downstream was affected by the high bidding volume in '22, overseas supply was tight, and the company is expected to achieve a sharp rise in volume and price. The 2023-25 EPS was adjusted to 2.19/2.84/3.47 yuan (previously 2.27/3.02/-), maintaining the target price of 94.31 yuan, increasing holdings.
The company's revenue continues to grow, and profit levels are affected by calculated depreciation. The company announced that it achieved revenue of 2,653 million yuan/ +7.1% in '22, and net profit of 316 million yuan/ -38.5% to the mother. 22Q4 achieved revenue of 701 million yuan/+21.4% /+1.5% month-on-month, and net profit of -18 million/ -115.4% /-119.3% month-on-month. The decline in profit in Q4 was mainly contract asset impairment of $59 million and subsidiary goodwill impairment of $37 million.
The company acquired a forging subsidiary and promoted technical reform and production expansion after the merger and acquisition. The synergistic effect was remarkable. In 2022, Shengjiu Forgings achieved revenue of 1,220 million/ +12.3%, and net profit of 138 million/ +33.4%. Shengjiu has the production capacity for large-scale, special-shaped, high-end and large-scale forgings, and can produce large ring forgings with a diameter of 12 meters. After this acquisition, Shengjiu became a wholly-owned subsidiary of the company. The company actively promoted the technical improvement and production expansion of Shengjiu forgings. Production capacity for the first phase was released at the end of 22, and production capacity for the second phase is expected to begin to be released. Production expansion and technological improvement reduce costs to provide the company with a competitive advantage.
The company connected with leading domestic fan manufacturers, and tight overseas production capacity brought opportunities in 23 years. The company has deep cooperation with leading wind power companies such as Mingyang Intelligence and Sany Heavy Energy. The large megawatt main bearings have switched to using three rows of rollers and spherical roller bearings. The company's products are expected to enter the prototype stage in 23 years, improving the product structure and increasing gross profit margins. Domestic wind power tenders exceeded 109 GW in '22. It is expected that domestic wind power installations will be large in '23, and production capacity supply for overseas bearing companies is tight. As a leading domestic bearing company, the company is expected to enjoy a sharp rise in volume and price due to insufficient supply.
Risk warning: Production capacity construction has fallen short of expectations, and wind power installations have declined sharply.