疫情以来的外部环境掩盖公司近年质变，加大装备及研发投入为转型铺路。装备方方面，公司自18 年以来加大固定资产投资，持续提升高端高效的先进产线。研发方面，公司23 年新市场、新客户开发数量、研发费用均创新高。但20、21 年受疫情、出口退税取消、大宗原材料上涨等影响，ROE 均低于5%，随着下游需求修复以及新订单签订，23 年ROE 达16%。Changbao Co., Ltd. focuses on the production of small to medium caliber special seamless steel pipes. Its main products are oil well pipes and boiler tubes. The brand is well known and accounts for a high share of exports. The company has been established for more than 60 years and is located in the middle of the industrial chain. The upstream raw materials are bars, and the downstream customers are mostly well-known enterprises at home and abroad in the fields of oil and gas, boilers and machinery. The current production capacity is about 1 million tons, and sales volume in 23 years is 790,000 tons. Oil well pipes and boiler tubes account for 64% and 25% of gross profit respectively, and are the company's main products.
Downstream oil and gas capex grew moderately, and the boom in thermal power boilers continued. Global oil and gas capital expenditure is expected to rise moderately in 23-26. Among them, capital expenditure for drilling services in the Middle East region, the company's main export market, reached 16 billion US dollars in 23, and is expected to continue to rise in 24-26, reaching about 19 billion US dollars by 26, which is expected to drive the company's demand for oil well pipes.
In terms of thermal power boilers, China added about 41 GW of coal power installed capacity in 23, an increase of 53% over the previous year. China's coal and electricity approval exceeded 90 GW per year for 2 consecutive years, which is expected to support the boom and continuation of demand for coal-fired power boiler tubes.
The external environment since the epidemic has covered up the qualitative changes in the company in recent years, and increased investment in equipment and R&D has paved the way for transformation. On the equipment side, the company has increased investment in fixed assets since '18 and continues to improve high-end and efficient advanced production lines. In terms of R&D, the company's new markets, number of new customers developed, and R&D expenses all reached record highs in 23 years. However, due to the impact of the epidemic, cancellation of export tax rebates, and increases in bulk raw materials, etc., the ROE was below 5%. With the restoration of downstream demand and the signing of new orders, the ROE reached 16% in '23.
Start the NEV precision tube and 8,500-ton special materials project. The time is right for high-end transformation. The company launched 2 new field projects in 23, namely the 50,000 ton NEV precision tube project and the 8,500 ton NEV and semiconductor specialty materials project. The output value of the two projects after completion is about 1.3 billion, which is expected to significantly boost the company's profits and high-end transformation.
The company's EPS is expected to be 0.88, 0.99, and 1.10 yuan/share in 24-26, which is comparable to the company's 10XPE in '24, and the target price is 8.80 yuan. The initial coverage gives a purchase rating.
Risk warning
The risk that downstream oil and gas and thermal power capital expenses fall short of expectations; the risk of product development and customer certification falling short of expectations; the risk of falling short of expectations in terms of new project sales and profit margins; the risk of fluctuations in raw material prices; the risk of large exchange rate fluctuations and changes in the export environment; and the risk of macroeconomics falling short of expectations.
