Incident: On April 20, 2024, the company released its 2023 annual report. The company officially entered the A-share GEM on September 20, 2023, and achieved operating income of 523 million yuan for the whole year, up 16.25% year on year; net profit to mother was 101 million yuan, up 11.34% year on year; net profit without return to mother was 96 million yuan, up 22.04% year on year.
There have been many breakthroughs in the field of R&D, rapid market development, and a historic turning point for the year. In 2023, the company achieved business breakthroughs in many areas. Specifically, in terms of research and development, the company developed forward sliding shaft design capabilities and passed a full set of tests to build the world's first fully automatic laser cladding production line, became the only domestic enterprise to mass-produce laser-clad wind power sliding bearings, and extended the industrial chain to the field of permanent magnet high-speed motors to develop 6 new applications throughout the year; (2) in terms of market development, the company maintained steady growth in the industrial bearing market. Its international business grew rapidly year-on-year (overseas revenue increased 49.17% year on year), and added 8 new customers throughout the year Furthermore, it has achieved short-list brand designation for some key projects, timely delivery of main pumps and motor bearings within the nuclear power island, signing and delivery of contracts for various major projects, such as tens of millions of orders for the combustion engine business; (3) In terms of technological innovation, a PLM platform has been fully built to enhance the company's design and development efficiency and differentiated advantages, and 13 new manufacturing process development, such as turning and milling in line with processing, have been completed, and processing efficiency has improved markedly.
“Domestic substitution” promotes development, and “rolling through skating” brings space. The country has introduced a number of policies to promote the import substitution and localization of sliding bearing products. Currently, there is still a certain gap between China's dynamic pressure oil film sliding bearing technology and foreign countries. The domestic industry is still growing, and “domestic substitution” will further promote the development of the industry.
At the same time, the wind power industry is developing in the direction of high power and low cost, and “rolling over” will become an important technology development direction in the future. It is also the most promising solution for reducing the cost and efficiency of ultra-high power wind power gearboxes in the future, and technical upgrading of old wind farms will also generate huge market demand for high-power wind power gearboxes, thus driving sliding bearings to be used in large quantities. Thanks to “domestic replacement” and “rolling with a smooth transition”, sliding bearings still have high ceilings. As a leader in the domestic sliding bearing segment, high demand will continue to drive its business development, and its market share may increase steadily.
The production capacity of hydrodynamic oil film sliding bearings has expanded, and high-speed permanent magnet motors have become a new growth point. The total investment in the company's IPO fund-raising project is about 530 million yuan, of which: (1) It is estimated that 381 million yuan will be used to build an efficient production line project with an annual output of 30,000 sets of high-precision sliding bearings. After delivery, the production scale of the company's hydrodynamic oil film sliding bearing products will be added, and the production capacity of more than 32,000 sets of high-precision sliding bearings will be added after delivery, greatly alleviating the plight of insufficient production capacity; (2) It is estimated that 53 million yuan will be invested in the industrialization project for high-speed permanent magnet motors and generators. The construction period is two years. The annual production volume of motors and series products. Currently, the company has technical reserves for high-speed permanent magnet motors and has achieved small-batch mass production. Combined with the channel synergy advantages brought by the sliding bearing business, high-speed permanent magnet motors may become the company's new growth curve.
Investment suggestions: As a leading enterprise in the domestic dynamic pressure oil film sliding bearing segment, the company has strong technical advantages and continuous promotion of superimposed production line construction. We expect the company's revenue in 2024-2026 to be 6.35/8.38/1,099 billion yuan, up 21.30%/32.01%/31.20% year on year; net profit to mother is 1.31/1.79/238 million yuan, with a year-on-year growth rate of 29.52%/36.91%/32.57%, EPS 2.18/2.99/3.97 yuan respectively. The corresponding PE was 21/15/12 times, covered for the first time, and given an “added” rating.
Risk warning: Accounts receivable are bad, raw material prices fluctuate, production line construction progress falls short of expectations, and industry demand falls short of expectations.