Yingliu (603308) Company Research: Two-machine blade 100 billion US dollar track has been made in China since then
First, let’s start with a question: Why is Buffett willing to privatize PCC for 37.2 billion US dollars?
PCC is a global leader in two-machine superalloy blades with an estimated market value of 500 billion.
The first is: 1) The 100 billion US dollar track constructed by two high-temperature alloy blades.
Two-machine superalloy blades are the first key piece of aero engine, and the global market size is expected to reach 150 billion US dollars in the next 10 years.
2) High barrier characteristics of the two-machine blade track: the demand side continues to grow and supplements the supply side with a small number of dispersions, resulting in a steady growth in the profit side.
High 杭州桑拿网 technical barriers; slow technology changes, and difficult opportunities for cornering overtaking; difficult certification; global two-machine customers attach great importance to the long-term and stability of strategic cooperation with blade qualified suppliers.
3) The two-machine blade has a good business model.
Investment casting is essentially a capital-intensive industry, coupled with high technical barriers, resulting in fewer new entrants.
PCC continued to grow based on the downstream two-machine orders, and achieved good operating stability and sustainability with its monopoly market share, and had good cash flow.
From 2006 to 2015, PCC’s net profit and operating cash flow CAGR reached 17.
78% and 24.
Second, why can Yingliu be cut into the 100 billion US dollar track?
First of all, in order 武汉夜生活网 to change the monopoly situation of a very small number of high-temperature alloy blade suppliers for a long time, major international two-machine manufacturers such as GE have actively cultivated and released new qualified suppliers to enrich the supplier system and enhance the security of the supply chain.
We believe that Yingliu is one of the few companies in the world where the “technology, equipment, quality and scale” of the two-machine precision casting field meet the strict requirements of companies such as GE, and has mature overseas customers in the fields of construction machineryStrategic Supply Experience.
At present, the company’s two models of two-machine high-temperature alloy blades have passed inspections by domestic and international manufacturers, and it is a fact that they have entered the international two-machine customer supplier system.
Third, in benchmarking against PCC, we believe that Yingliu has successfully entered the global two-machine giant supply system. The order and revenue of two-machine products are expected to continue to rise, and its profitability will also be significantly improved in the future.
The first is: 1) Global scale: Yingliu has entered the global two-machine blade this annual track of 15 billion U.S. dollars, and has successfully cut into the global two-machine giant supplier system. In the future, orders will continue to rise in revenue scale.It is a natural reflection of many core competitiveness such as the company’s asset scale, technical strength, and customer experience.
2) Domestic size: Two-machine high-temperature alloy blades are among the “two-machine special” breakthroughs and “neck neck” technology breakthroughs to achieve independent and controllable key breakthrough directions.
The company undertakes the research and production tasks of two major special projects and key models of the state, and develops and produces high-temperature alloy blades and other products for China Aviation Development and China Reignite Development, which will directly benefit from the increase in the volume of military aviation engines and gas turbines.
3) Future development: adhere to the development strategy of “industry chain extension, value chain extension”.
The initial development of the industrial chain (to the parent alloy material end and the finished product end) and the increase in the value of the single-piece blade product will bring momentum to the company’s future development.
In addition, there are reserve projects for small turbo engines and helicopters.
We expect net profit for 2019/2020/2021 to be 1.
04 ppm, corresponding to the current estimates of 58X, 36X, 25X, with a “Buy” rating.
Risk Warning: The orders for the blades of the two machines are lower than expected; the development of the traditional casting business exceeds expectations; the assumptions of the market size calculation of the two-machine superalloy blades may deviate from the actual situation.