The leader in military titanium industry faces a heavy asset dilemma. It is considered to be the “China version of Nasdaq”. Since the official transaction, the science and technology board has received much attention from the whole people. Today, the official transaction of the science and technology board has been full moon. Some people think that in the past month, this is a new wealth-producing and distributing center. On the first day, it was “born” 125 billionaires; some people think that this is a test field for innovation in China’s securities market. It is exerting a subtle influence on startup companies, VCs, and PE institutions in the primary market.
But there is no doubt that in the long run, it is more likely to be the touchstone of the value of hard technology companies. Therefore, at this time node, we launched the “Overview of the Board” series, hoping to bring readers to quickly understand the company.
Western Superconductor is the only commercial manufacturer of low temperature superconducting wire rods in China. It is also the only whole process manufacturer in the world of niobium titanium ingots, superconducting wires and superconducting magnets. The current market value of Western Superconductor has exceeded 20 billion, and it is considered to be the most popular original new three-board enterprise among the first stocks that have landed on the board.
This article takes you to understand Western Superconductivity.
Company Profile and Growth History
Western Superconducting Materials Technology Co., Ltd. (hereinafter referred to as Western Superconductor) Predecessor Superconductor Co., Ltd. is a Sino-foreign joint venture established by Northwest Institute and Superconductor International on February 28, 2003. In 2012, it became a company limited by shares West Superconductor is engaged in the research and development, production and sales of high-end titanium alloy materials, superconducting products and high-performance superalloy materials. The products are oriented to domestic military civilian aircraft, aviation engines and other fields, of which the military industry is the main source of customers.
Western Superconductor was listed on July 22, 2019. As of 15:00 on August 29, 2019, the price of Western Superconductor was 46.48 yuan per share.
The following is a detailed introduction to the company’s three main products:
High-end titanium alloy material
The high-end titanium alloy materials produced by Western Superconductor include bars, wires, forgings, etc., mainly used for aviation (including aircraft structural parts, fasteners and engine parts, etc.), ships, weapons and so on. As the main revenue source of the company, high-end titanium alloy materials accounted for 77.59%, 81.92% and 85.90% of the total revenue in 2016-2018. See the figure below for details.
Western Superconducting Product Revenue Composition
Superconducting products
The company’s superconducting products, including bismuth titanium ingots, bismuth titanium superconducting wires, bismuth tin superconducting wires and superconducting magnets, are mainly used in advanced equipment manufacturing, large-scale scientific engineering and other fields. It is worth mentioning that the establishment of Western Superconductivity originated from the ITER project. The ITER program is currently one of the largest and most influential international scientific research cooperation projects in the world. The principle of ITER is to use the magnetic field to constrain the plasma, simulate the solar fusion reaction of the sun to generate energy and realize controllable use, commonly known as “artificial sun”. . The program requires the use of NbTi and Nb3Sn superconducting wires to make superconducting magnets. The wire manufacturing tasks are undertaken by the participating countries. When the Chinese government decided to participate in the ITER program in January 2003, there were no domestic companies with NbTi and Nb3Sn superconducting wire production capacity. In 2003, Superconducting Limited began to industrialize NbTi and Nb3Sn, and passed the comprehensive evaluation of ITER organization. In volume supply in 2012, all deliveries have been completed. It has become the world’s only full-scale production enterprise of niobium titanium ingots, superconducting wires and superconducting magnets.
In terms of revenue share, the proportion of superconducting products in 2016-2018 decreased year by year (17.94%, 14.33%, 10.28%), mainly due to the gradual decrease in ITER’s use of ultra-conductor materials during the reporting period.
High performance superalloy material
The company’s high-performance superalloy materials, including deformed superalloys, casting and powder superalloy mother alloys, are mainly used in national key development areas such as aero-engines and gas turbines and nuclear power equipment. According to the composition of the company’s revenue products, the proportion of high-performance superalloy materials in revenue is almost zero in 2016-2018. The main reason is that the production line was officially put into production in 2018. Therefore, high-performance superalloy materials are still in trial production. At the stage of obtaining relevant certification, less revenue is generated.
Company’s financial data and analysis, the risks faced by the company
In 2016-2018, Western Superconducting revenue was 970 million yuan, 960 million yuan, and 1.08 billion yuan respectively. In 2017 and 2018, revenue increased by -1% and 12.5% from the previous year. Among them, the decrease in revenue in 2017 compared with the previous year was mainly due to the fact that the ITER project basically completed large-volume supply in the first half of 2017, and the sales revenue of the company’s ITER superconducting wire rods dropped sharply.
Western Superconducting Revenue
Western Superconductor currently faces risks primarily from both market and financial aspects:
Market risk
In 2016-2018, the revenue of titanium alloy materials, the main business of Western Superconductor, accounted for about 80% of the total revenue. Titanium alloy material is the core material of China’s military aircraft, but the country’s future demand forecast for military aircraft is uncertain, which may easily lead to fluctuations in company performance. In addition, Western Superconducting customers have a higher concentration. In 2017-2018, the revenue from the top five customers accounted for 57.04% and 56.19% of the total revenue of the current period (see the chart below), so the company’s revenue is highly susceptible to the adjustment of major customer procurement policies.
The top five customers of Western Superconductor
Financial Risk
The company’s main customers come from the military industry, while the military industry enterprise has a long payment cycle, resulting in a slow turnover of accounts receivable and a large amount of company funds. In 2016-2018, the book value of the company’s bills receivable and accounts receivable accounted for 23.39%, 28.40% and 28.13% of the total assets of the year, respectively, accounting for 79.32%, 102.76% and 103.22% of the current operating income. In addition, the long production cycle of the product leads to a large inventory of funds, which directly affects the company’s capital turnover and increases the company’s inventory price risk.
Use of company fundraising
According to the prospectus, the Western Superconductor will be mainly used for high-performance superalloy materials and powder tray projects for engines and repay bank loans.
High-performance superalloy materials are one of the most advanced materials urgently needed in China’s key application fields. In the world’s advanced engine development, the amount of high-temperature alloy materials has accounted for 40% to 60% of the total weight of the engine, so the superalloys are also Known as “the cornerstone of advanced engines.” The final turbine disk is one of the most critical components in the hot end parts of aero-engines and gas turbines. At present, the two products produced in China generally have insufficient quality stability, low yield and yield, and high cost. therefore,The development and mass production of high-performance superalloy materials and powder trays are key factors in advancing the development of cutting-edge technology and related industries in the country.
In addition, due to the characteristics of the military business, the company’s production and operation has a large amount of loan demand. Therefore, the 292 million yuan raised this time will be used to repay bank loans.
Western Superconductor Fundraising Use
Other companies on the track
At present, the comparable companies in Western Superconductor are Baoti Titanium and Jintian Titanium.
Bao Ti was established in July 1999. It is the largest titanium and titanium alloy production and research base in China. It has a complete industrial chain of titanium products and has a wide range of applications. Baoti Titanium was listed on on April 12, 2002. As of 15:00 on August 30, 2019, the company’s share price was 24.20 yuan; the market value was 10.4 billion yuan. Western superconducting titanium is mainly used in the aerospace industry, and its product coverage is small. Jintian Titanium Industry was established in April 2004. The products are located in the R&D and production of high-end titanium alloy rod and wire and large forgings required by aviation and aerospace military industry. is not yet available.