Industrial chain integrated tool faucet, CNC blade + micro-drill double-wheel drive growth.
The company is the tungsten industry management and control platform of Minmetals Group. Minmetals Group continues to inject tungsten industry-related assets into the company, which is expected to create the industrial chain integration advantage of the combination of "raw materials" and "deep processing".
Raw materials: Minmetals Group has made a commitment to the integration of the industrial chain. at present, the company is hosting the core tungsten mines and smelting enterprises of Minmetals Group, waiting for the performance of mining enterprises to pick up and inject after meeting the conditions. Tungsten resources reserves within the scope of the company management account for 13% of the country's total reserves, tungsten smelting annual production capacity accounts for 10% of the national ammonium paratungstate (APT) production capacity, and the raw material guarantee capacity is strong.
Zhuzhou Diamond: China's CNC blade leader, high-end. Zhuzhou Diamond digital control blade production capacity is expected to reach about 100 million pieces in 2021, and is expected to reach about 200 million pieces by the end of the 14th five-year Plan. At the same time, the product structure is expected to continue to be optimized, and the development of high-end areas is strong. The localization rate of cutting tool varieties in the typical demonstration line of aviation enterprises has reached more than 70%, and it will be marked as a flying tool general contract project in mid-2021. At the same time, the new aerospace production line is expected to be put into production in 2022, which is expected to increase revenue and profitability at the same time. It is estimated that the net profit of Zhuzhou Diamond from 2021 to 2023 is 2.42 million yuan, with an increase of 64.63%, 28.73% and 26.75% over the same period.
Jinzhou Seiko: PCB tool leader, the market share of the world's leading. Jinzhou Seiko products are mainly micro-drills and milling cutters used in PCB processing, with an output of 510 million micro-drills in 2020, with a domestic market share of 30% and PCB drill needles with a global market share of 18%. It is the only drafting unit of PCB drilling / milling tools national standards. 0.01mm diameter micro-drill, milling cutter are successfully developed, the technical level is in the lead in the world, into the dental needle series, the product line is further rich. At the same time, with the expansion of production of hard bars, it is expected to achieve self-supply of bars in the future, and profitability will also be improved. Jinzhou Seiko is expected to achieve a net profit of 2.45 billion yuan, 287.33 billion yuan respectively from 2021 to 2023, an increase of 53.19%, 16.95% and 15.12% over the same period last year.
The scale of the tool consumption market is expected to continue to expand, and the import substitution space for high-end tools is broad. The total consumption of China's tool market in 2005 is about 39.3 billion yuan, and that of CAGR7.80% from 2019 to 2019. Considering that China's tool consumption accounts for a low proportion of CNC machine tool consumption, and there is still a certain gap between China and developed countries, assuming that China's tool consumption accounts for 37% of China's tool consumption in 2030, while China's machine tool consumption increases with 1.5%CAGR, according to our estimates, the scale of China's tool consumption market is expected to reach 63.1 billion yuan in 2030 and maintain 5%CAGR growth between 2020 and 2030. According to the Association's calculation data of the peak year (2018), the high-end market of cutting tools in China is conservatively estimated at 22.2 billion yuan, of which about 2Grammer relies on imports, and the import substitution space is about 15 billion yuan. Under the dual influence of trade friction and epidemic situation, high-end customers represented by military industry and aerospace are willing to strengthen domestic products in order to ensure the security of the supply chain. we believe that we are in the golden period of domestic replacement of high-end tools. The reform of central enterprises is light, the profitability is expected to be gradually improved, the equity incentive plan is promoted, and the certainty of performance growth is enhanced.
The reform of the company's central enterprises continued, the separation and transfer of the "three supply and one industry" project was completed, the number of employees in 2020 was 2583 less than that in 2016, the operational efficiency of light operation was significantly improved, and the rate of 2021Q3 sales / management / financial expenses decreased by 2.84pm and 0.5pcts respectively compared with 2016, increasing profitability. At the same time, the company launched an equity incentive plan. The first phase involved 25 million shares, accounting for 2.33% of the total share capital at the time of the company's announcement. The first batch of people awarded 143people, going deep into the company's middle-level cadres and core professionals, which is expected to fully mobilize the enthusiasm of employees and enhance the certainty of performance growth.
Investment advice and profit forecast: considering the growth space of the tool industry and the company's integrated CNC tool leader in the domestic industrial chain, we estimate that the company is expected to achieve a net profit of RMB 546 million and RMB 856 million respectively from 2021 to 2023, corresponding to the current PE33X/26X/21X, maintaining a "buy" rating.
Risk hint: the progress of domestic substitution is not as expected, the scale of tool market expansion is not as expected, and capacity expansion is not as expected.
