Cinda Securities: Gave Luyang Energy Saving Buy rating

2021-10-28Wang Fangchao of Cinda Securities Co., Ltd. conducted a study on Luyang Energy Conservation and released a research report "Performance meets expectations, demand continues to boom", this report gives a buy rating to Luyang Energy Conservation, and the current stock price is 25.95 yuan.

Luyang Energy Saving(002088)

event:

The company released the third quarter report of 21 years, the first three quarters of the revenue of 2.29 billion yuan, +51.5% year-on-year, the net profit attributable to the mother of 400 million yuan, +82.0% year-on-year, weighted average ROE 16.72%, +6.38pct over the same period of the previous year. In the third quarter of the single quarter, the revenue was 840 million yuan, +34.8% year-on-year, +0.2% month-on-month, the net profit attributable to the mother was 150 million yuan, +41.5% year-on-year, +1.2% month-on-month, and the weighted average ROE was 6.04%, +1.63pct compared with the same period of the previous year.

Comments:

Demand continued to boom, and capacity expansion was in line with expectations. 21Q1-3 achieved revenue of 612 million yuan, 836 million yuan and 838 million yuan respectively, +82%, +52% and +35% year-on-year, and the gross profit margin in the single quarter was 37.2%, 35.3% and 34.7% respectively. Strong demand for pottery fiber, the company full production and full sales, since the fourth quarter of last year to implement technological transformation and expansion, the first half of this year's Inner Mongolia base expansion, we expect the end of 21 the company's production capacity can reach 45-46 million tons (20 years production capacity of 360,000 tons), to ensure the follow-up growth momentum.

The supply and demand pattern of the industry has improved, and the company's market share is expected to further increase.

Supply side: Dual control of energy consumption accelerates the clearance of low-end production capacity. Ceramic fiber products use electric furnace melting technology, and electricity accounts for 20-30% of the cost. In the first half of 21, Shandong's energy consumption dual control progressed smoothly, and the low-end production capacity in the industry faced greater environmental protection and control pressure, and was shut down one after another. The company's production electricity consumption is about 20% less than that of its peers, and the cost advantage is significant.

Demand side: Carbon neutrality promotes the promotion and application of energy-saving materials. Compared with refractory bricks, ceramic fibers have excellent properties 1) reduce the temperature outside the furnace wall, 2) shorten the heating time in the furnace, 3) reduce the heat loss, 4) reduce the weight of industrial kilns, and further expand the scope of application in traditional industries such as petrochemical, metallurgy, building materials, electric power, and machinery manufacturing, and realize the promotion in many new fields such as shipbuilding, solar thermal, transportation, and environmental protection dust removal.

Profit Forecast and Investment Rating: We expect the company's net profit attributable to the mother in 21-23 years to be 538 million yuan, 648 million yuan and 763 million yuan, respectively, +45.3%, +20.4% and +17.7% year-on-year, and the current market value corresponds to PE of 25x, 21x and 18x respectively. The company has an absolute product, technology, service and market leadership in the field of ceramic fiber, operational efficiency is improving, production capacity is expanding, optimistic about the company's ability to continue to increase market share, expand product application areas and optimize product structure, maintain a "buy" rating.

Risk factors: the prosperity of traditional downstream industries is not as good as expected, the promotion of new products and the expansion of new fields are not as expected, and the construction of production capacity is not as expected

A total of 5 institutions have given ratings and 5 buy ratings in the last 90 days; the average target price of institutions in the past 90 days is 29.7; the Valuation Analysis Tool of Securities Star shows that Luyang Energy Saving (002088) good company rating is 3.5 stars, good price rating is 3 stars, and valuation comprehensive rating is 3.5 stars.