Yingliu Co., Ltd.: Leading the world in foundry capacity, targeting first-class overseas customers
Anhui Yingliu Group entered the foundry industry in 1990, leading the industry in equipment level, technical capabilities and industrial scale. The main products of traditional business are pumps, valve parts, and mechanical equipment components, which are all non-standard parts specially customized for customers. They are mainly used in oil and gas, clean and efficient power generation, engineering and mining machinery and other high-end equipment industries. Products are exported to more than 40 countries and regions, serving more than 100 leading global industry customers, including more than 10 Fortune 500 companies such as General Electric, Siemens, Caterpillar, and Schlumberger, and many national industry leaders such as Emerson. Targeting first-class overseas customers, the share of export revenue remained above 60% until 2019. In addition, the company's “value chain extension” has achieved remarkable results, and the two-plane+nuclear power business continues to expand and blossom.
One of the “two-engine” businesses: aero engines, the forward-looking layout is gradually blossoming. On April 8, 2024, the Anhui Provincial Development and Reform Commission issued the “Anhui Province's Implementation Plan to Accelerate the Cultivation and Development of the Low-Altitude Economy (2024-2027) and Certain Measures”, proposing that the scale of the low-altitude economy should reach 80 billion yuan by 2027 to build the two core cities of the low-altitude economy, Hefei and Wuhu, basically forming a low-altitude economic development pattern with dual-core linkage, multi-point support, and piecemeal development. Yingliu Co., Ltd. is expected to take advantage of the trend as the mainstay of the low-altitude economy in Anhui Province. Yingliu Airlines' forward-looking layout, which began in 2016, is expected to bear fruit. The company's product matrix is multi-dimensional: 1) Aircraft engine components: chassis and blade technical capabilities have been recognized by international companies, and domestic commercial aircraft engines have delivered casings and blades to help domestic replacement and acceleration. 2) Complete aero engine: At present, the YLWZ-130/190 has completed localized development and small-batch production; the first YLWZ-300 was delivered in the first quarter of 2024; the 120KW and 275KW hybrid packages target the drone freight, extended-range electric truck, and emergency rescue markets, and have been recognized by target customers. 3) Complete helicopter: The development of unmanned helicopters with a take-off weight of 270 kg and a take-off weight of 1000 kg has been completed. In 2024, we will focus on completing the development and product certification of drones with a take-off weight of 600 kg.
The second “two-engine” business: gas turbines, high-temperature alloy blades from Yingliu Co., Ltd. helped accelerate the domestic substitution process to accelerate the domestic gas turbine market by nearly 200 billion yuan, which is mainly monopolized by foreign-funded enterprises. Yingliu Co., Ltd. has outstanding technical strength in gas turbine components and is expected to help accelerate the domestic substitution process. In 2023, the company achieved breakthroughs in various types of parts and components in the gas turbine business, with a new order amount exceeding 600 million yuan. Among them, it was the first to pass the inspection and batch delivery of new F-class heavy gas engine grade 1, 2, and 3 directional hollow turbine products, providing a strong guarantee for the smooth launch of 300MW heavy gas turbines; the company also signed strategic agreements with international gas engine leaders, and the order amount broke through a new high.
Nuclear power business: Approvals have been accelerated, the pace of approval of nuclear power castings+advanced materials two-wheel drive nuclear power has been accelerated, and the installed capacity is expected to grow rapidly. In 2022 and 2023, the National Assembly approved 10 nuclear power units, respectively. In 2023, China's nuclear power infrastructure investment was 503.1 billion yuan, an increase of 47.67% over the previous year. Yingliu Co., Ltd. obtained a civil nuclear safety equipment manufacturing license in 2008. A number of products replaced imports. The products covered conventional nuclear power plant components, nuclear island components, and nuclear island nuclear first-level core components, breaking the long-term monopoly of foreign companies on main pump pump cases. In addition, the company successfully completed technological breakthroughs in neutron absorption materials and composite shielding materials. Some key indicators surpassed Europe and America. Rigid and flexible shielding materials began to gain strength one after another, and nuclear power components+materials two-wheel drive will grow in the future.
Profit forecasting and valuation model:
Yingliu shares are expected to achieve net profit of 4.20, 5.24, and 665 million yuan respectively in 2024-2026, while PE is 23.48, 18.83, and 14.84 times, respectively. The traditional business of Yingliu Co., Ltd. has contributed steadily to profits. The two planes+nuclear power generation have created a new growth curve, and the low-altitude economic circuit is expected to take off. We will give Yingliu Co., Ltd. 30 times PE in 2024, corresponding to a target market value of 12.61 billion yuan and a target price of 18.57 yuan/share for the first time, covering the “buy” rating.
Risk warning: price fluctuations of major raw materials; changes in exchange rates; industry and market risks, debt repayment risks, and estimates are subjective