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On August 26, 2021, the company released its semi-annual report for 2021:
In the first half of 2021, the company achieved operating income of 149 million yuan, an increase of 45.43% over the same period last year, a net profit of 65 million yuan, an increase of 122.43% over the same period last year, and a non-net profit of 48 million yuan, an increase of 73.91%.
Comments:
Company Q2 achieved 84 million yuan (YoY 47.13% YoY QoQ 31.71%). Revenue growth mainly belongs to A customer upstream material manufacturer. Q2 has entered the peak season of stock preparation, the new capacity is released, and the company gets more material numbers in A customer. Deduct 27 million yuan from non-net profit (YoY 65.27% YoY 28.57%) and return to mother net profit 32 million yuan (YoY 80.11% QoQ-3.03%). The reasons are as follows: 1. Company Q1 received 8.6 million yuan in government subsidies, while Q2 received less subsidies, so that the company's net profit growth was lower than the revenue growth rate. The company's Q1&Q2 gross profit margin is relatively stable (62.99% to 62.08% respectively), significantly higher than the same period in 2020, especially in the face of upstream raw material prices and new products / capacity climbing period, the company can still maintain a high gross profit margin to demonstrate the company's excellent cost control ability. 3. The non-net interest rate deducted by the company's non-operating income is 32.14% and 32.31% respectively, and the profit level of each business of the company is stable. According to the company's history, Q2 enters the peak season of stock preparation, Q3 begins to enter the peak season of shipping, the company's new production capacity is released, and it is expected to maintain high growth throughout the year.
New production capacity will be released and investment in R & D will be increased to ensure long-term growth. The company's medium report shows that the company's fixed assets are 205 million yuan, an increase of 165 million yuan over Q1. Five of the 12 high-precision production lines planned by the company have been arranged, of which 4 production lines are being trial-produced and put into production gradually according to business needs, and an OLED international high-end production line and supporting equipment are being installed. H1 invested 15 million yuan in R & D, an increase of 93.93% over the same period last year; 79 R & D personnel, an increase of 36.31% over the same period last year, accounting for 20.84% of the total number of the company. With the release of the company's new production capacity and increasing R & D investment, the company's long-term growth space is expected to gradually open.
The company further optimizes the product structure, and the revenue of high-margin electronic composite functional materials accounts for more than 60%. In 20 years, the revenue of electronic composite functional materials of H1 company was 98 million yuan, accounting for 66.08% of the total revenue (18.90pct higher than the 20 annual report); Applied Materials Inc's revenue of precision manufacturing process was 46 million yuan, accounting for 30.72% of the total revenue (down 12.59pct from the 20 annual report); photoelectric display module materials were 5 million yuan, accounting for 3.19%. Electronic composite functional materials as the company's most profitable business at this stage, the proportion has increased significantly, with the arrival of the H2 shipping season, the company's performance is expected to achieve another good performance.
Profit forecast, valuation and investment rating. Shihua Technology has long focused on the design, development and manufacture of functional materials, relying on world-renowned customers such as Apple Inc and Samsung. As the company continues to increase investment in research and development, product categories and share continue to achieve breakthroughs, superimposed company to expand production actively, performance is expected to usher in high growth. We estimate that the company 2021 and 2022 will achieve a main income of 507 million yuan in 2023, with a net profit of 2.18 million yuan and 306 million yuan, corresponding to EPS1.27/1.78/2.43 million. On the one hand, the new consumer electronics materials track has high-tech barriers and is expected to enjoy a valuation premium (refer to Tongcheng Xinmiao in 21 years, 66 times PE); on the other hand, the company has high-quality customers, IPO projects have been launched, production capacity has been gradually released, and the performance in the next three years is expected to achieve a compound growth rate of 45% over the previous year. We give the company 40 times PE in 21 years, with a target price of 50.80 yuan, maintaining a "push" rating.
Risk tips: consumer electronics demand is not as expected, the competitive environment tends to be fierce, the progress of production expansion is not as expected, major customer risk.