The stock market is broad, and the market sentiment is increasing
The short-term stock market for the company's downstream application market is broad, and the future incremental market is booming. The company connects with high-temperature corrosion-resistant alloys in the high-end civil sector. The downstream includes petrochemicals, nuclear power, automobiles, environmental protection and other fields. Among them, applications such as nuclear power and automobiles have high stock demand, providing good support for the company's performance. Sectors such as nuclear power and environmental protection have received strong support from national policies and are showing a rapid growth trend. The overall performance support is provided for the company's current stability and future deterministic growth.
Optimized layout at home and abroad, with a high-quality and stable customer base
The company has entered the supplier systems of many large domestic and foreign companies such as GE, Emerson, Schlumberger, Velan, L&T, Flowserve, Neway, etc., forming stable customer relationships and laying a solid foundation for future company performance release. The high-temperature corrosion-resistant alloys and special alloys business are now close to or even fully sold. The three-year CAGR of the company's operating income/net profit after deduction of the parent in 2018-2020 reached 13%/16%. The company's high-temperature corrosion-resistant alloy casting and special alloy welding materials business maintained a high gross profit margin, which remained around 25%. Since 2016, the company's revenue share of high-temperature corrosion-resistant alloys has remained above 70%. With the further release of production capacity in the future, there is still plenty of room for improvement in the company's performance.
The gradual release of production capacity for fund-raising projects continues to empower the domestic civilian superalloy sector due to the company's upward performance, showing a situation where high-end product companies coexist with middle- and low-end product companies. There are many middle- and low-end product companies, and the annual production scale is generally below 1000 tons. As a large-scale high-end enterprise mainly for civilian use, the production capacity of high-temperature corrosion-resistant alloys reached 3,100 tons. The production capacity of high-temperature corrosion-resistant alloys in 2022 helped the company break through the production capacity bottleneck. After full delivery in 2023, the production scale of high-end superalloys for civilian use is far larger than that of other enterprises.
Investment advice: The company's net profit for 2021-2023 is predicted to be 94 million yuan, 118 million yuan and 127 million yuan respectively. The corresponding EPS is 0.79 yuan/share, 0.99 yuan/share, and 1.06 yuan/share, respectively. Corresponding to the current PE being 37.3, 29.7, 27.6 times, we think that PE in 2022 is 40-45x a reasonable valuation range, corresponding to the target price range of 39.6-44.55 yuan/share.
Risk warning: Fluctuations in raw material prices; repeated COVID-19 pandemics; blocking the commissioning of fund-raising projects; stock price fluctuations caused by fewer tradable shares.
