New Products: Carbon Fiber Has Strong Momentum, High Profit And Large Customer Stickiness.

Weihai Guang Wei composite material Limited by Share Ltd (hereinafter referred to as "Guang Wei composite"), released today (October 10th) evening announcement of the first three quarters of 2019, the company expects 2019 net profit of 419 million yuan to 450 million yuan in 2019, compared with 311 million yuan in the same period last year, an increase of 35% to 45% over the same period last year.

The above prediction is based on the following reasons:

1, during the reporting period, the company actively organized production and delivered in time, and the carbon fiber (including fabric) and carbon beam business maintained steady growth.

2, after preliminary calculations, the company's non recurring gains and losses in the first three quarters of 2019 were around 49 million 810 thousand yuan.

The first textile network reported earlier that in the first half of this year, the business income of Guang Wei complex was 836 million yuan, an increase of 28.5% over the same period last year. The net profit attributable to the parent company was 301 million yuan, an increase of 44.73% compared with the same period last year, and the net profit after deducting the net profit was 283 million yuan. An increase of 91.06% over the same period. Net profit per share was 0.60 yuan, up 46.34% over the same period last year.

In terms of products, military carbon fiber earned 457 million yuan, an increase of 31.38% compared with the same period last year. The main reason for the high growth of our military carbon fiber is that the application of carbon fiber in the aerospace industry is expanding, and the downstream orders of the company are increasing rapidly. In the first half of the year, the gross profit margin of military carbon fiber was 81.71%, and the high technology threshold and high quality requirement of military aerospace grade carbon fiber were the important reasons for maintaining the high profit margin level of the military carbon fiber business.

The wind power carbon beam business of Guang Wei composite has achieved operating income of 299 million yuan, an increase of 38.65% over the same period last year. Carbon beam business gross margin increased 2 points to 22.23%, mainly due to the increase in carbon beam production and depreciation of fixed assets. It is expected that the demand for carbon fiber in wind power will continue to increase with the increasing diameter of fan wheels. The company's downstream customer VESTAS is well placed in hand orders, and the company's tow project invested in Baotou can also guarantee the company's future growth in wind power.

The industry believes that during the reporting period, the overall revenue and profit growth rate of the composite has maintained a relatively high growth rate. The main reason is the company's two main businesses: military carbon fiber and wind power carbon beam business has maintained a rapid growth, and profit margins have been improved. In the first half of 2019, ROE was 10.35%, which is about 2.4 percentage points higher than that of the same period last year. In the second half of this year, the company's downstream customer, military, aerospace and wind power sector is still on the rise of the business cycle. It is expected that the company's annual high growth is expected.

Earnings also showed that over the past three years, the income and profits of composite materials have maintained rapid growth. In 2018, the company achieved operating income of 1 billion 363 million yuan and a net profit of 376 million yuan. Before 2017, the growth momentum of the company's business was the growth of military carbon fiber orders. The growth rate is about 17%, and the profit rate is higher. After 2017, wind power carbon beam business has become a new growth point of the company, and its revenue growth has been greatly improved. The growth rate of revenue in 2017 and 2018 is 49.9% and 43.6% respectively. The profit margin of carbon beam business is lower than that of military carbon fiber, so the gross margin level of the company dropped from 61% in 2016 to 46.7% in 2018.

According to public information, Guang Wei complex is a private high-tech enterprise that develops and produces high-performance carbon fiber and carbon fiber composites. The company's main business includes: carbon fiber, carbon fiber fabric, carbon fiber prepreg, carbon fiber composite products and carbon fiber core production equipment R & D, production and sales. In 1995, Mr. Chen Guangwei founded Guang Wei fishing gear in Weihai. In 1998, Guang Wei Group introduced the first wide carbon fiber prepreg production line in China. In 2002, the company set up the first Chinese private enterprise engaged in R & D of carbon fiber, Weihai development Fiber Co., Ltd.

In 2007, the company officially entered the military aviation carbon fiber supply system. In 2005, two national "863" carbon fiber projects were approved by the state, and the application of domestic carbon fiber in China's military aviation manufacturing field was launched. In the same year, the company built the first domestic T300 level (company code CCF300) carbon fiber production line, with capacity of 100 tons. In 2007, the company's T300 level products were verified, and after the approval of the General Armament Department, the company formally entered the military supply chain system.

In 2014, the company was restructured from a limited company to a joint stock company, and the name of the company was changed to Guang Wei composite stock company. In 2017, Guang Wei complex was officially launched on GEM.

Wang Yiming, an analyst with Huajin securities, said that looking back on the development process of Guang Wei complex, we can find that the company started producing carbon fiber leisure fishing gear and developed into prepreg production, and then extended to carbon fiber production, and entered the high-end aerospace field. The company has clear development strategy and strong execution. At the same time, the company has always attached importance to technology research and development. Through technological traction, the carbon fiber industry chain has been extended from downstream products to the development and production of upstream carbon fibers with high technological content.

At present, Chen Liang and Wang Yanqing controlled the 37.33% stake in Guang Wei complex by holding 79.77% stake in Guang Wei Group and became the actual controller of the company. CITIC investment center is a financial investor who has entered the company before listing. It has announced that it will reduce its holdings of all shares in the company within 6 months. Employees of the company hold 6.27% of the company's shares through three partnership platforms. The product portfolio of Gao Yi's assets increased its holdings in 2019 and now has about 4.14% of the company's shares.

In view of this, the development of fiber and new energy materials is the main source of revenue and profits for the company. The main subsidiaries of Guang Wei complex are expanding fiber, light energy new materials, Guang Wei Jing machine, Guang Wei Research Institute and so on. Among them, expansion fiber is the main unit of the company's carbon fiber production. The new material of Guang Wei energy mainly produces wind power carbon beam. These two subsidiaries are the main source of income and profit for the light and complex materials. Guang Wei precision machine is based on the design requirements of the company's carbon fiber and related products production line, to provide the development and production of non-standard equipment. Guang Wei Research Institute is responsible for the research and development of carbon fiber and advanced composite materials.

In Wang Yiming's view, because of the wide application area of carbon fiber, there is huge room for growth. After years of investment, China's import substitution in the field of carbon fiber is accelerating. Guang Wei composite material is a leading enterprise in the field of carbon fiber and carbon fiber composite materials in China. In the field of military carbon fiber: product profit is high, customer stickiness is large, supporting model orders are on the rise, and the new model in the future is expected to become a new growth point. In the field of wind power, deep cooperation between Guang Wei complex and wind power VESTAS and Baotou tow project ensured the company's subsequent growth. On the whole, Guang Wei complex has grasped the strategic opportunity of domestic substitution of carbon fiber. As early as 2005, it successfully broke through T300 grade small tow carbon fiber, which has been highly recognized by downstream customers. At present, on the scale of revenue and profit, Guang Wei complex is the first tier of domestic carbon fiber, and the company's development strategy is clear. After gaining the leading position of small tow carbon fiber, it is continuing to expand the new growth point of large wire strand carbon fiber.