Event: on October 11, 2021, double Star New Materials released its quarterly report for 2021. The company achieved revenue of 4.241 billion yuan in the first three quarters, an increase of 22.26% over the same period last year, and a net profit of 973 million yuan, an increase of 116.1% over the same period last year, exceeding the upper limit of the previous guidelines (968 million yuan).
Comments:
Q3 performance exceeded expectations. In the third quarter, the company's new materials business continued to grow, optical materials and new energy materials grew vigorously, and newly signed orders increased significantly compared with the same period last year. At the same time, the company accelerated the commissioning of new production lines to further improve efficiency. Benefiting from this, the company's Q3 achieved revenue of 1.599 billion yuan, an increase of 17.64% over the previous month, and a net profit of 370 million yuan, an increase of 12.81% over the previous month. The company's performance grew for the seventh consecutive quarter and reached a record high, exceeding market expectations. At the same time, the company's cash flow continued to improve, Q3 operating net cash flow of 772 million yuan, a month-on-month increase of 62.18%. In addition, affected by the climbing of the new production line, the company's profit margin was slightly dragged down, with Q3 gross profit margin of 32.63%, a month-on-month decrease of 2.07pct, and a net profit rate of 23.11%, a decrease of 0.98pct. With the gradual stabilization of the production capacity of the new production line, the company's profitability is expected to further improve.
The new production line is considerable, and the release of production capacity is accelerated. The company is in the transition period of the release of new material production capacity, the company's new production line construction is in full swing, Q3 is under construction of 1.627 billion yuan, a month-on-month increase of 29.95%.
Specifically, the company put into production two new optical lines in each of the third and fourth quarters, with a total additional production capacity of 300000 tons and an additional output of 100000 tons. From the perspective of capacity structure, it is estimated that by the end of the year, the company's new material production capacity will increase from 250000 tons to 550000 tons, packaging film production capacity will remain below 250000 tons, and the capacity structure will continue to be optimized. Judging from the quarterly results, after the company's business focus has shifted to the high-end film materials represented by optical materials, the periodicity has been greatly weakened, coupled with the quarterly production of the new line for growth, the company's steady growth trend is expected to continue. With the continuous optimization of the company's product structure, vertically integrated industrial layout, and rich product matrix, the company's long-term growth space has been opened.
The customer expansion is smooth, and the new production capacity is digested smoothly. With the release of production capacity of 200 million square meters of optical film project in the second half of the year, the company will comprehensively transform into high-end, and the proportion of high-end film performance will continue to increase in the second half At the same time, the introduction of new customers of the company's optical film is smooth. 1) the company introduced Hisense in the first half of the year, and its share in the second half is expected to continue to increase; 2) in June, the company won a large order of Kangguan optical film, the fifth largest TV ODM factory in the world, accounting for 60% and 70% of its bidding; and 3) the company will continue to increase its cooperation with Samsung and other old customers, and its share is expected to continue to increase. 4) the high-definition anti-dazzle film designed and developed by the company for Huawei has been supplied in large quantities, and the cooperative development of optical diaphragm for new products will continue to be carried out in the future. In addition, the company is also actively promoting the cooperation projects of other domestic terminal TV customers, such as Skyworth, TCL and Changhong, etc., and the dual efforts of production capacity and customers will further enhance the market competitiveness and market share of the company's optical film.
Profit forecast and investment rating: benefiting from the pick-up of terminal demand and the acceleration of domestic substitution, the domestic optical film industry ushered in a period of opportunity. Double Star New Materials, as a leading manufacturer, actively expand its production capacity and is expected to fully enjoy the industry dividend. We estimate that the return net profit of the company in 21-22-23 will be 1.897 billion yuan, respectively, and the corresponding PE will be as much as 22-16-13. We are optimistic about the company's leading position in the domestic optical film industry and maintain its "buy" rating.
Risk factors: the epidemic situation is repeated and the downstream demand is lower than expected.