A rising star of superalloy. Ronda started from copper-based alloy pipes, strategically deployed the core material superalloy in the field of two machines in 2015, and successively completed casting and deformed superalloy production lines, with a production capacity of 6000 tons in the first half of 2022 and is expected to reach 8000 tons in 2025. With fast capacity expansion and outstanding product performance, the company is a rising star in the industry. Kechuang Board will be listed in 2022, and the financing will be used to continue to build superalloy production capacity, which is expected to reach 18000 tons in 2028. The company's superalloy business has maintained rapid development, accounting for 65.0% of gross profit in the first half of 2022, which has become the engine of the company's performance growth.
Superalloy: "two machines" key materials, long-term supply exceeds demand. With the characteristics of high temperature resistance, superalloy has become the core material of hot-end components in military aircraft, civil aviation, power generation and other fields. We predict that during the 14th five-year Plan period, the application of military aircraft will be affected by the maintenance, expansion and replacement of fighter aircraft, with the largest amount of superalloy, with a compound growth rate of 14.3%; the consumption of civil aviation will increase rapidly with the market penetration of domestic civil aviation engines, with a compound growth rate of 143.9%; the overall domestic consumption has increased steadily, with a compound growth rate of 10.3%.
Domestic superalloy suppliers are dragged down by the high barriers of industry technology and capital, as well as the reaching production cycle and the long customer verification cycle, the capacity scale is difficult to meet the domestic consumption demand, and the domestic superalloy demand gap is expected to reach 22000 tons in 2025. The self-sufficiency rate of domestic materials is 57.7%, and the industry will be in short supply for a long time.
The potential leader of the industry, excellent in scale and technology. Taking advantage of the prosperity of the domestic superalloy industry, Ronda shares rapidly expand production and position high-end aviation applications, IPO listed in 2022 raised 855 million yuan for the new high-quality aviation-grade superalloy production capacity, ranking among the first echelon of domestic production capacity, with great potential for income growth. The company's technical team is composed of domestic top superalloy experts who have worked for Baosteel Special Steel, Shenyang Liming and other top superalloy experts, realizing that the smelting process of triple deformed alloy has been put into production, and some single crystal alloys have been validated by military aircraft aviation customers. The outstanding product performance enables the company to cut into the high-margin armaments materials market, currently has 26 brands available for military products, and the company's comprehensive gross profit will be significantly improved after the order volume.
Profit forecast and investment rating: considering the rapid expansion of the company's superalloy production capacity and the proportion growth of high gross margin products, we estimate that the company's revenue from 2022 to 2024 will be RMB 1.73 billion, respectively, an increase of 89%, 31%, 19%, and net profit of RMB 1.933 million, an increase of 164%, 79%, 44%, and a corresponding PE of 573222x, respectively. Compared with the listed companies in the same superalloy industry, the PE of the company is significantly lower than that of comparable companies; considering the company's high growth and low valuation, it gives the company a "buy" rating for the first time.
Risk tips: the risk of cost fluctuation; the progress of material research and development is not as expected; the development of downstream customers is not as expected.
