PAIKE(SH:605123) Guoxin Securities·2024-04-26 13:30Investment Rating - The report gives a "Buy" rating for the company, with a target price range of 80.0-89.0 CNY based on relative valuation methods [91][68]. Core Views - The company has a diversified business layout across various sectors including aerospace, power, petrochemical, and general machinery, which has contributed to consistent revenue growth over the past five years [28]. - The company is expected to benefit from the increasing demand in the aerospace sector, with projected sales growth in aerospace forgings from 12.23 billion CNY in 2023 to 18.06 billion CNY by 2026, reflecting a compound annual growth rate (CAGR) of approximately 34% [60][91]. - The report highlights the company's strategic focus on expanding its market share in the overseas wind power sector, which has shown significant revenue growth of 245% in 2022 compared to 2021 [29]. Summary by Sections Production and Market Trends - The company’s forging products are widely used in various industries, including engineering machinery, metallurgy, and high-speed rail equipment, with a positive outlook due to structural reforms in the national economy [1][2]. - The production of forgings has shown a steady increase, with a peak production of 1,913,000 tons in 2023 [5]. Financial Performance - The company’s return on equity (ROE) and return on assets (ROA) have remained relatively stable, with a slight decline in ROE to 13.9% in the first three quarters of 2023, primarily due to a 12% increase in total shares following a capital increase [13]. - The operating cash flow has experienced significant fluctuations, influenced by factors such as large cash inflows from note discounts and extended receivable periods due to customer payment methods [14]. Profitability Analysis - The gross margin for aerospace forgings is competitive, being higher than that of comparable companies, attributed to a higher proportion of high-margin military product sales [30]. - The report forecasts stable gross margins for petrochemical forgings at 18% from 2023 to 2026, indicating consistent profitability in this segment [61]. Future Projections - The company is expected to achieve total revenues of 35.95 billion CNY in 2023, with a projected growth rate of 29% [86]. - The forecast for net profit indicates a gradual increase from 5.09 billion CNY in 2023 to 6.81 billion CNY by 2026, reflecting a growth trajectory of 22% in the final year [91]. Valuation Insights - The report employs both absolute and relative valuation methods, concluding that the company's reasonable valuation range is between 84.3 and 89.0 CNY, with a target PE ratio of 18-20 times for 2024 [89][93].