BGRIMMTEC(600980) 国泰君安·2024-09-24 23:06Investment Rating and Target Price - The report initiates coverage on Beikong Technology with an Overweight rating and a target price of 15.23 CNY, representing a 28.74x PE multiple for 2024 [4] - The current stock price is 13.22 CNY, indicating a potential upside based on the target price [4] Core Investment Thesis - Beikong Technology is a leading domestic mining and metallurgical equipment manufacturer, benefiting from the Belt and Road Initiative and the global expansion of mining companies, which is expected to accelerate its overseas business growth [2][4] - The company holds a dominant market share in flotation equipment, with its large-scale flotation machines leading the domestic market [4] - Beikong Technology is expected to achieve EPS of 0.53/0.63/0.73 CNY for 2024-2026, driven by strong demand for mining equipment and its global expansion strategy [4] Business Overview - Beikong Technology operates in two core segments: mining and metallurgical equipment and magnetic materials [4] - The company’s mining equipment business, particularly flotation machines, has a strong domestic market presence and international recognition, with its 680m³ flotation machine being the largest in the world [4] - In the magnetic materials segment, the company focuses on high-performance products, with an annual production capacity of 60,000 tons [4] Financial Performance and Projections - Revenue is projected to grow from 929 million CNY in 2023 to 1.299 billion CNY in 2026, with a CAGR of 13% [9] - Net profit is expected to increase from 92 million CNY in 2023 to 139 million CNY in 2026, with a CAGR of 17% [9] - The company’s gross margin is forecasted to improve from 26.2% in 2023 to 27.7% in 2026, driven by higher-margin mining equipment sales [9] Industry and Market Trends - Global mining capital expenditures have been on an upward trend since 2018, with copper exploration spending reaching 3.12 billion USD in 2023, a ten-year high [4][55] - The Belt and Road Initiative is driving Chinese mining companies to expand overseas, creating opportunities for domestic mining equipment manufacturers like Beikong Technology [4][55] - The magnetic materials market is highly competitive, with China being the largest producer globally, but the industry is transitioning towards higher-value, high-performance products [4][36] Valuation Analysis - The report uses a PE-based valuation method, comparing Beikong Technology to peers like Longci Technology, CITIC Heavy Industries, and Naipu Mining Machinery, with an average PE multiple of 22.72x for 2024 [14] - A PB-based valuation suggests a target price of 17.32 CNY, based on a 2.20x PB multiple for 2024 [15] - Combining both methods, the report sets a target price of 15.23 CNY, implying a 28.74x PE multiple for 2024 [15] Key Risks and Opportunities - The company’s growth is heavily dependent on the success of its overseas expansion, particularly in markets covered by the Belt and Road Initiative [4] - The magnetic materials segment faces challenges from price volatility and intense competition, but the company is focusing on high-performance products to improve margins [4][36] - The mining equipment segment is expected to benefit from increasing global mining capital expenditures and the need for equipment upgrades [4][55]