Main points of investment:
The operating income of New Qiang Lian in the first half of 2023 was 1.215 billion yuan, down 3.79% from the same period last year; the net profit belonging to shareholders of listed companies was 101 million yuan, down 58.47% from the same period last year; and basic earnings per share was 0.31 yuan, down 58.11% from the same period last year.
The pressure on China News is obvious, the business of wind power bearings has declined slightly, and the locking plate has grown rapidly.
In mid-2023, the company reported operating income of 1.215 billion yuan, down 3.79% from the same period last year; net profit belonging to shareholders of listed companies was 101 million yuan, down 58.47% from the same period last year; and non-net profit was 124 million yuan, down 49.32% from the same period last year. The performance is obviously under pressure.
From a quarterly point of view, the operating income of Q1 and Q2 companies in 2023 was 506 million and 709 million respectively, and the net profit of Q1 and Q2 companies increased by-21.41% and 14.55% respectively compared with the same period last year. The net profit of Q1 and Q2 companies decreased by 54.63% and 61.06% respectively, which decreased by 52.95% and 45.34% respectively.
From the perspective of sub-business in mid-2023:
1) the slewing bearing business achieved operating income of 926 million, down 12.19% from the same period last year. 2) the locking plate realized operating income of 167 million yuan, up 33% from the same period last year. 3) the company's wind power business revenue was 794 million, down 18.31% from the same period last year.
Gross profit margin has declined significantly, profitability is under pressure
2023H1, the company's gross profit margin was 25.93%, down 5.38 pct from the same period last year; the net profit margin was 9.07%, down 10.71pct from the same period last year. During the period of the company, the expense rate remained relatively stable at 10.7%, an increase of 0.24pct over the same period last year.
Among them, the gross profit margin of the core product slewing bearing products was 27.01%, down 5.14pct from the same period last year.
The main reason for the large decline in the company's gross profit margin is that 1) due to the influence of downstream customer demand and delivery rhythm, the wind power products in the first half of the year are mainly yaw variable propeller bearings with lower gross profit margin, and the proportion of spindle bearings with high gross profit margin is small. 2) the market competition of yaw pitch bearings, which is the main product of the company, is more fierce, especially the maturity of ordinary yaw pitch bearings is high, and the market competition intensifies, so the company adopts the price strategy to keep the market share, resulting in a significant decrease in gross profit margin.
Domestic leaders of wind power bearings benefit from the improvement of wind power installation demand and the promotion of localization of parts and components.
The company is mainly engaged in the R & D, production and sales of large slewing bearings, locking plates and industrial forgings and couplings, the main products include wind power spindle bearings, yaw bearings, variable propeller bearings, marine equipment crane slewing bearings, shield machine bearings and key parts, as well as locking plates and forgings, etc., mainly used in wind power generation, marine equipment, shield machines and construction machinery and other fields.
In the field of wind power main bearing, the company 12MW offshore anti-Taiwan wind type spindle bearing successfully went offline; in the shield machine field, the technical indicators of the super-large diameter shield machine main bearing manufactured by the company in June 2023 reached the world advanced level, indicating that the development level of China's shield machine main bearing has reached a new level.
Wind power is an important part of clean energy and one of the core footholds of dual-carbon policy. The wind power installation in the first two years of the 14th five-year Plan is far lower than expected due to the decline of wind power subsidies in the first two years of the 14th five-year Plan. It is expected that wind power installation will begin to supplement growth in the second half of the 14th five-year Plan. According to the forecast of GWEC, the annual average annual installation of wind power will reach more than 70GW from 2023 to 2025, a substantial increase compared with the past two years. From January to August 2023, China's wind power generation was 530.8 billion kilowatt hours, an increase of 14.4 percent over the same period last year, accounting for only 5.22 percent of the total electricity generation, a slight decline over the same period last year. In the medium and long term, there is still much room for wind power growth.
Wind power bearing is one of the products with high technical content and lowest localization rate in wind power equipment parts. with the continuous downward bidding price of wind power, the demand for localization of components continues to rise, and the localization rate of yaw pitch bearings has reached a higher level. the localization of spindle bearings and gearbox bearings with higher technical difficulties is still low, and there is obvious room for improvement.
The company has been rooted in slewing support for many years and has been at the forefront of the industry in the field of localization of wind power bearings. the company is in the forefront of the industry in large megawatt three-row cylindrical roller generator main bearings, double-row tapered roller main bearings, single-row tapered roller main bearings, self-aligning roller main bearings and other products, and is still in the forefront of the industry. At present, it is still in the forefront of customer demand running-in and grinding of production lines, equipment and technology, and small batch verification. In the future, with the promotion of localization, it is expected to make a large-scale batch, which will bring new growth to the company's wind power business.
In addition, the company issued 1.21 billion convertible bonds in 2022, of which 1.113 billion was invested in the gearbox bearing and precision parts project. The report revealed that the progress of the gearbox bearing and precision parts project has reached 51.12%. On August 29, the company disclosed that the investor relations activity record table shows that the gearbox bearing R & D and design has been completed, and equipment installation and commissioning are currently under way, and then you can start the processing and production of the sample. Overall, it is expected to be faster than originally planned. The localization rate of spindle bearings and gearbox bearings is low, and the company's two new products are expected to fully benefit from the full localization of wind power bearings.
The acquisition of the remaining equity of Shengjiu forgings to enhance the competitiveness of the industry, the upstream link of the company's products is forgings, and the company owns 48.85% of the shares of Luoyang Shengjiu Forgings Co., Ltd. Shengjiu forgings are mainly engaged in ring forging business, providing slewing bearing production raw materials for the company, which is the extension of the company to the upstream. Through the acquisition of the remaining 51.15% stake in Shengjiu forgings, the company has achieved 100% holding, which further strengthens the control of the upstream forging business and strengthens the competitiveness of the company's supply chain. At the same time, Shengjiu forgings are well managed and contribute a lot to the company's performance. In 2022, Sheng Jiu forgings realized operating income of 1.22 billion and net profit of 138 million, which is equivalent to 46% of the transportation income of New Qiang Lian in 2022 and 44% of the net profit. After the completion of the fixed increase, the company will own 100% of Shengjiu Forgings and show a substantial increase in earnings.
Profit forecast and valuation
The company is a leading domestic wind power bearing enterprise, which benefits from the strong demand for wind power installation and has a large market space in the future. at the same time, the company's spindle bearing and gearbox bearing business is ready to start. We predict that the operating income of the company from 2023 to 2025 will be 2.846 billion, 3.537 billion and 4.232 billion respectively, and the return net profit will be 322 million, 477 million and 616 million respectively, and the corresponding PE will be 32.8XX, 221.71.112X respectively. The valuation of the company is slightly higher than that of the industry comparison company. Considering the large space for the domestic production of wind power spindle bearings and gearbox bearings in the future, the company still has good growth. Continue to maintain the company's "overweight" rating.
Risk tips: 1: wind power installation demand is lower than expected; 2: the impact of wind power technology path changes on bearing demand; 3: increased market competition, gross profit margin decline; 4: raw material prices rise.