On August 5, WXPK Precision Machinery Industry Group, a leading manufacturer of high-temperature alloys, titanium alloys, aluminum alloys, magnesium alloy ring forgings, free forgings, and precision die forgings in China, successfully IPO on the Shanghai Stock Exchange.
WXPK plans to publicly issue no more than 27 million shares, accounting for no less than 25% of the share capital after the issuance.
Metal forging supplier military product business has first-mover advantage
The main business of WXPK is the research and development, production and sales of metal forgings. The main products cover various metal forgings such as rolling ring forgings, free forgings, precision die forgings, etc., which can be used in aviation, aerospace, shipbuilding, electric power, petrochemical and other Such as machinery and other industries. WXPK entered the military industry in 2013, and its products have covered multiple types of aero engines in service and in the aerospace field. In the aerospace field, it has participated in the development and development of the Long March series and the expedition upper stage series of carrier rockets and multiple types of missiles. Supporting, a certain type of gas turbine that has participated in supporting the ship field has been installed in some naval vessels.
The forging industry in which WXPK is located is the basic industry of the equipment manufacturing industry. Currently, the scale of China's forging industry ranks first in the world. From the perspective of the global forging industry, advanced foreign forging companies such as Germany, the United States, Russia, Japan, and the United Kingdom, relying on long-term technological accumulation and strong R&D capabilities, are leading the world in terms of forging technology, forging technology and equipment levels. In recent years, China's forging industry has developed rapidly. Some products have broken foreign monopolies, gradually realized localized substitution, and have reached the international advanced level in aerospace, nuclear power equipment forgings and other fields. However, due to the large number of enterprises in the industry, the relatively low degree of concentration, the overall lack of scale advantages and industrial chain synergy in the industry, and the relatively weak research and development capabilities of upstream new materials in the industry, the international competitiveness in high-end forgings is relatively weak.
WXPK is one of the few private enterprises in China that can provide supporting special alloy precision ring forging products for high-end equipment such as aero engines, aerospace launch vehicles and missiles, satellites, gas turbines, etc. It has now entered the China Aviation Development Group, Aerospace Science and Technology Group, and Aerospace The supply chain system of leading domestic companies in various fields such as Science and Industry Group. It has the first-mover advantage of military products in the military industry. During the reporting period, the scale of military products business revenue increased year by year.
High-margin products account for relatively low revenue, and downstream industries drive performance growth
During the reporting period, WXPK military products revenue grew rapidly, accounting for 24.80%, 20.47%, and 34.68% of total revenue, respectively, showing an overall upward trend. At the same time, civilian products were still the main source of income for Parker New Materials during the reporting period, but the overall revenue ratio showed a downward trend. The civilian products business mainly includes forgings for civil ships, petrochemicals, electric power, and other machinery industries. . In terms of product analogy, petrochemical forgings are the main source of income in the past three years, accounting for 34.53% of revenue in 2019, followed by power forgings, aviation forgings, other forgings, aerospace forgings, and ship forgings.
From 2017 to 2019, all major financial indicators of WXPK maintained a steady growth momentum. Among them, the compound annual growth rate of operating income was 35.15%, and the compound annual growth rate of net profit attributable to the parent was 70.08%. The growth of performance is mainly driven by downstream industries. With the implementation of major policies such as "aircraft special" in recent years, emerging strategic industries such as a new generation of high-end equipment represented by aerospace have received strong support from national policies. In addition, military aircraft upgrades , The promotion of major aerospace projects, etc. have contributed to the performance growth of Parker New Materials.
In terms of gross profit margin, since WXPK’s main products are more diverse, the changes in gross profit margin of each product during the reporting period are also more complicated. The product types with the highest gross profit margin from 2017 to 2019 are aerospace forgings, aviation forgings, and ship forgings. During the period, the gross profit margin of petrochemical forging products with the highest revenue share did not exceed 20%.
Compared with some of the financial indicators of comparable listed companies in 2019, WXPK has certain disadvantages due to its single financing channels and insufficient equipment production capacity. However, the overall gross profit margin in 2019 is significantly higher than the average of comparable listed companies. It is worth noting that Triangle Defense has the highest gross profit rate in 2019, reaching 45.01%. Its main business is aviation, accounting for more than 90% of its revenue, while WXPK’s various main business revenues account for low proportions. At 40%, it can be seen that the product premium brought by the professional positioning in the industry is relatively high, and the gross profit margin advantage of WXPK is mainly reflected in the comparison with comprehensive enterprises.
Raise 758 million yuan to ease capacity bottlenecks
In terms of R&D, as of the end of 2019, WXPK has 80 technical and R&D personnel, accounting for 19.37% of the total number of employees. In the previous two years of 2017 and 2018, the proportion of technical employees was 14.77% and 15.38%, respectively. The overall presentation is more obvious. The upward trend. In terms of patents, WXPK has 52 patents, including 31 invention patents and 21 utility model patents. R&D expenses have increased year by year, and the proportion of R&D will fluctuate due to the different R&D progress of each phase of the project.
In terms of raised funds, WXPK plans to raise a total of 758 million yuan in this public offering. In addition to the construction of the R&D center and supplementary working capital, it will be mainly invested in the construction of hot-end special alloy materials and components for aero engines and gas turbines. The proposed investment amount 572 million yuan, accounting for 75.46% of the total funds raised.
After the project is completed, it will be used for the production of high-temperature alloys, titanium alloys, aluminum alloys, special stainless steels and other forgings for aero engines and gas turbines. In addition, it can also be used for the production of high-end forgings such as industrial heavy-duty gas turbines, nuclear power equipment and offshore equipment. WXPK will have a 7000T free forging hydraulic press and a higher precision CNC ring rolling machine to alleviate the current capacity bottleneck.