Leading provider of hydrodynamic oil film bearing solutions
Chongde Technology is a leading high-end industrial service enterprise engaged in industrial transmission products, services and application technology in China. Due to their high performance, hydrodynamic oil film sliding bearings are widely used in high-end equipment in key fields such as energy generation, industrial drives, petrochemicals and ships.
Since 2020, the company's operating income and net profit have shown a continuous upward trend. In the first three quarters of 2023, revenue increased 21%, and net profit to mother increased 33%. Among them, the share of higher gross margin sliding bearing component revenue showed an overall upward trend; the overall cost ratio showed a downward trend during the period, with financial expenses falling significantly.
During the growth period of domestic dynamic pressure oil film sliding bearings, energy generation and industrial driving, etc., China's dynamic pressure oil film sliding bearing industry is still growing. There is still a lot of room for expansion in product applications, and the industry is expected to maintain a rapid growth trend in the future. According to the forecast of the Forward-looking Industry Research Institute, the compound annual growth rate of China's dynamic pressure oil film sliding bearing market will be about 13% in 2020-2026.
Downstream demand is strong, and many areas such as energy power generation and industrial driving have blossomed: the safety requirements in the energy power generation and nuclear power sector have been extremely high. Domestic sliding bearings have had a large import replacement space; in the wind power sector, sliding bearings significantly increase the torque density of wind power gearboxes, reduce the cost of torque per unit, and are clearly driven by “sliding instead of rolling” under large-scale expansion.
The company is based on independent research and development to achieve domestic replacement
Product customization attributes are obvious. The company is based on independent research and development, and its manufacturing, testing and testing capabilities are leading in the domestic industry. Currently, various types of hydrodynamic oil film sliding bearings independently developed in the nuclear power field have been widely used in nuclear power plants already built and under construction at home and abroad; in the wind power sector, factory type tests for gearbox sliding bearings within 500mm have been completed; products in the industrial drive field have gradually replaced other international manufacturers and are supplied in batches with compressors, steam turbines, high-speed petrochemical pumps and other products of well-known international companies. The share of the domestic hydrodynamic oil film sliding bearing market in 2020 was about 5.57%.
Profit forecasting
Combining the domestic dynamic pressure oil film bearing market size at CAGR 13% in 20-26 years, the company's market share is expected to increase in energy generation, industrial drives, petrochemicals, ships and other fields with its own product advantages and customer advantages. At the same time, in terms of cost, the company's fund-raising projects will promote intelligent production, which is conducive to improving the stability of product quality and the utilization rate of raw materials, thereby further reducing production costs and highlighting the company's scale effect. In summary, we expect the company's revenue for 23-25 to be $530/6.74/852 million yuan, up 18%/27%/26% year on year, and net profit to mother of 1.08/1.43/183 million yuan respectively, up 18%/32%/28% year on year. Referring to the valuation of comparable companies, a certain premium is given based on the company's advantages. PE 25x in 24 years corresponds to a market value of 3.6 billion yuan and a target price of 59.58 yuan/share. For the first time, coverage is given, and a “buy” rating is given.
Risk warning: R&D process and industrialization fall short of expectations; risk of fluctuations in raw material prices; downstream growth falls short of expectations; estimates are subjective and are for reference only.