Ronda Co., Ltd. focuses on the research and development, production and sales of alloy materials, and its business is gradually transformed from alloy pipes to nickel-based corrosion-resistant alloys and superalloys. The company ploughs alloy business, alloy production and testing technology is in the lead in China. Based on the adjustment of the company's development strategy, since 2018, the company has focused its strategic focus on the aviation grade superalloy field and concentrated resources on the development of superalloy business. and gradually shrink the alloy pipe business, the company's superalloy production and sales and capacity utilization increased steadily from 356.32 tons to 1105.14 tons; alloy pipe business gradually shrank, production decreased from 9013.18 tons in 2018 to 5439.96 tons in 2021.
With the remarkable effect of strategic adjustment, the company's superalloy business has developed rapidly and its profitability has been greatly improved. The company has a production capacity of 3000 tons of cast alloys and 3000 tons of deformed superalloys in 2021. With the acceleration of customer development downstream of superalloys, the proportion of the company's superalloy income has increased significantly, from 6.15% in 2018 to 43.77% in 2021. The company's gross profit margin rose from 9.68% in 2018 to 19.41% in 2021, showing a steady upward trend. The company will turn losses into profits in 2020, and achieve a substantial growth on this basis in 2021, with a net profit of 70.2081 million yuan. With the gradual expansion of projects under construction and fund-raising in the future, the company's superalloy performance contribution is expected to continue to grow.
Aerospace, gas turbine, nuclear power and other downstream demand multiple resonance, superimposed national strategy and policy support, the development prospect of superalloy is broad. Superalloys are widely used in aero-engines, gas turbines, nuclear power, automotive turbochargers and other fields. as the core basic materials in the field of "two engines", there is an urgent demand for high-quality superalloy materials in China. superalloys are facing large space for demand growth and import substitution. Aero-engine and gas turbine are strategic high-tech industries that need to further improve the ability of independent innovation in our country. the state provides policy support for the development of superalloys, and the development of superalloys has a broad prospect. The domestic superalloy market is 18.7 billion yuan in 2020, and it is expected to reach 31.4 billion yuan by 2025, with a compound growth rate of 10.92% from 2020 to 2025.
Fund-raising project: after the "Technical Transformation Project with an additional annual production capacity of 10,000 tons of aerospace grade superalloy" raised by IPO, the company will increase the production capacity of superalloy by 6000 tons, 2000 tons and 2000 tons in 2026-2028, and form 18000 tons of superalloy production capacity in 2028 (5000 tons of cast superalloy and 13000 tons of deformed superalloy). The fund-raising project will help to further enhance the company's independent research and development capability in the field of superalloy, and enhance the company's superalloy competitiveness and market share.
Investment suggestion: the company has broad prospects for superalloy business. With the gradual expansion of projects under construction and fund-raising in the future, the company's performance is expected to be released. We expect the company's 2022-2024 net profit to be 1.25x24x342 million yuan, corresponding to the closing price of 35.98yuan on August 31, 2022, and the PE in 2022-2024 will be times as much as 71-36-26, covering for the first time and giving "recommended" rating.
Risk tips: uncertain progress and results of product introduction verification, technical risks, substantial fluctuations in raw material prices, downstream demand change risk.
