Report Abstract

High-end forging and casting has significant advantages and is the mainstream process of manufacturing key parts of high-end equipmentHigh-end forging and casting process mainly refers to the efficient manufacturing of difficult-to-machine materials and parts for high-end equipment, and the products produced have high performance, high reliability and high value-added forging and casting technology, such as overall precision forging technology for large and complex components, radial-axial two-way precision ring rolling technology, superplastic isothermal forging technology, powder forging technology, investment precision casting technology, etc. These technologies can realize the integration of complex components, near-net shape and forming modification, and provide small or no blanks and parts to high-end equipment, which has the advantages of reducing production costs, shortening cycles, improving the performance of parts and extending the life of high-end equipment.

At present, the high-end forging and casting process has become the mainstream process for manufacturing key components such as structural parts of various types of military aircraft bodies, aircraft landing gear structural parts, disc ring parts, blades and other key parts in the "two engines" of engine gas turbines, and plays a key role in aerospace, weapons and equipment, shipbuilding, nuclear power equipment and other fields.

The application of return material is expected to reduce the cost of high-end forgings, investment casting + 3D printing or will speed up the production of high-end castings, when parts are produced through the forging process, generally more than 90% of the materials will become return materials, and nickel metal in high-temperature alloys and titanium alloys and titanium alloys and other metals are expensive, which also leads to the high production and manufacturing costs of high-end parts. Internationally, a complete set of scrap recycling and reuse models has been established, for example, the proportion of recycled materials used in the production process of superalloys can reach 70%-90%, which can reduce costs by more than 30%. In the future, the large-scale application of returned materials in China is the key direction for high-end forgings to reduce production costs in the future.

Investment casting + 3D printing is one of the important development directions of high-end casting. 3D printing does not require molds, effectively shortens the processing cycle, generates very little waste, has good efficiency and cost advantages in non-mass production, and is expected to promote rapid iteration of design solutions in the R&D stage. At present, the application of investment casting + 3D printing includes two different levels: one is to obtain casting patterns or casting patterns through printing, so as to shorten and accelerate the casting process; The second is to use 3D printing to repair casting defects or combine metal components to improve the yield of castings. In terms of 3D printing for direct printing of metal castings, due to its inherent limitations such as stress distribution, many microscopic holes, surface roughness, high cost, and production efficiency, 3D printing is difficult to become an alternative process for investment casting, and is currently mainly used as a supplement and extension of the casting process. At present, investment precision casting still has an irreplaceable role in the transformation and upgrading of high-end equipment manufacturing industry. The demand for forging and casting in many downstream fields is strong, and the high-end equipment forging and casting market is long and snowy (1) Aircraft fuselage forgings and castings

With the expansion of demand for forgings and castings driven by the large-scale growth and structural upgrading of military aircraft, we expect that the total market space for forgings and castings of aircraft aircraft body structures will be about 1500-250 billion yuan from 2024 to 2030, with an annual average of 220-36 billion yuan (Note: The market space for forgings and castings measured in this article refers to finished parts, not for processing links).

We expect that the total market space of forging and casting parts for civil aircraft body structure will be about 280-67 billion yuan from 2024 to 2030, with an annual average of 40-10 billion yuan.

(2) Aero engine forgings and castings Military

aircraft are accelerating the installation of military aviation engine batch production models, and we expect that the market space of forgings and castings in the engine of the aviation engine will be about 270 billion to 370 billion yuan from 2024 to 2030, with an average annual rate of 400-53 billion yuan.

We expect that the market size of China's civil aviation engine will be 2.25 trillion yuan from 2022 to 2041.

(3) Gas turbine forging and casting parts

catalyze the release of gas turbine demand in the fields of distributed energy supply, industrial power generation, pipeline pressurization and ship power, and with the maturity of domestic gas turbines, the domestic forging and casting market has great potential.

(4) Ship forging and casting military

ships continue to maintain a high prosperity, the civil shipbuilding industry has entered a new round of upward cycle, as an important supporting industry for military ships and civil ships, the forging and casting industry will also benefit, and the demand for forgings and castings is expected to maintain growth. (5) The "dual carbon" goal of forgings and castings of nuclear power units provides new opportunities for the development of nuclear power, and the number of approved nuclear power units in 2024 has hit a new high after the resumption of approval. We believe that China's nuclear power has entered a golden period, and the nuclear power performance of related forging and casting enterprises is expected to enter a period of expansion. We estimate that the total market space of forgings and castings for nuclear power unit equipment from 2024 to 2033 will be about 50 billion yuan, with an average annual value of 5 billion yuan.

Domestic high-end forging and casting capacity building has achieved remarkable results, and the horizontal and vertical extension may bring rich returns to industry companies

In February 2022, the United States Department of Defense released a report entitled "Securing Defense-Critical Supply Chains", which put forward an assessment and recommendations for strengthening the key supply chain of the defense industry base, and the United States Department of Defense focused on four key areas that are particularly important for national security. Castings and forgings are one of them. It is noted that castings and forgings are essential for the development, procurement and maintenance of all major defense systems of the defense industrial base. Forgings and castings can be used on almost all platforms (e.g., ships, submarines, aircraft, ground combat vehicles, spacecraft, etc.), kinetic weapons and weapon systems (e.g., guns, missiles and rockets, bombs, ammunition, artillery, etc.), and many support systems. It can be seen that ensuring the capacity of high-end forgings and castings is very important for strengthening the basic capacity of the national defense industry and shaping a safe, stable and flexible supply chain.

In terms of capacity construction, according to incomplete statistics, domestic high-end forging and casting enterprises have promoted 16 capacity expansion projects (including planned and implemented) in the past 10 years, with a cumulative investment of 7.682 billion yuan. Of these, 15 have only started construction in the last five years, and 11 projects have been put into production. Among them, there are 9 expansion projects in the forging industry, with a total investment of 4.339 billion yuan, and the expansion enterprises include AVIC Heavy Machinery, Triangle Defense, Parker New Materials, Aerospace Technology and Hangya Technology, etc., and the expanded forgings involve large die forgings, isothermal forgings, ring forgings and precision forging blades. There are 7 expansion projects in the foundry industry, with a total investment of 3.343 billion yuan, and the expansion enterprises include aviation materials shares, steel research institutes, Yingliu shares, Wanze shares, etc., and the expanded castings include precision casting blades, small structural precision castings and large thin-walled precision castings. The ceiling of domestic high-end forging and casting capacity has been significantly improved, and with the release of downstream demand on the right track, this bottleneck breakthrough will lay the foundation for future performance growth.

In terms of industrial chain extension, according to incomplete statistics, domestic high-end forging and casting enterprises have laid out 14 industrial chain extension projects (including planned and implemented) in the past 10 years, with a cumulative investment of 8.255 billion yuan. Among them, there are 9 horizontal and 5 vertical extension projects of the industrial chain, 12 of which have only begun to be laid out in the past five years, and 8 projects that have been put into operation at present. There are 9 industrial chain extension projects in the forging industry, with a total investment of 6.998 billion yuan, and related enterprises include AVIC Heavy Machinery (horizontal + vertical extension), Triangle Defense (horizontal + vertical extension) and Parker New Materials (horizontal extension). There are 5 industrial chain extension projects in the high-end foundry industry, with a cumulative investment of 1.357 billion yuan, and related enterprises include Steel Research Institute Gaona (horizontal extension), Tunan shares (vertical extension) and Yingliu shares (horizontal extension).

Enterprises can lay out new products, open up new market segments, and raise the performance ceiling through horizontal expansion, and vertical extension can increase the added value of products and enhance the company's profitability.



Investment Advice With the accelerated release of demand in downstream application fields, the high-end forging and casting industry is expected to usher in a new round of rapid growth opportunities. It is recommended to pay attention to the forging and casting enterprises that have obtained supporting qualifications and shares in the new generation of military aircraft, domestic large aircraft, domestic gas turbines, domestic aero engines and nuclear power equipment, as well as enterprises that have a smooth layout in the horizontal expansion and vertical extension of the industrial chain.

Important enterprises in the industrial chain:

Forging enterprise: AVIC Heavy Machinery (600765. SH), Triangle Defense (300775. SZ), Hangya Technology (688510. SH), Aerospace Science and Technology (688239. SH), Parker New Materials (605123. SH) and Tongyu Heavy Industries (300185.SZ).

Foundry Enterprise: Aviation Materials Co., Ltd. (688563. SH), Steel Research Gaona (300034. SZ), Tunan shares (300855. SZ), Yingliu shares (603308. SH), Wanze Co., Ltd. (000534. SZ）。

Risk warning: raw material prices fluctuate, affecting the profitability of the industry; The research and development of forging and casting technology has encountered a bottleneck, and the opportunity to support new models of equipment may be missed; Product quality control fails, resulting in loss of orders; the risk of price adjustments for military products; Downstream demand adjustment, customer orders are less than expected; The progress of R&D of new models of downstream high-end equipment may be less than expected; Shock risk for potential entrants.