Event

The company issued an annual performance forecast, which is expected to achieve a net profit of 13.6-1.41 billion yuan in 2021, an increase of 88 percent over the same period last year, and earnings per share are expected to be 1.17-1.22 yuan.

Corresponding to Q4, the net profit of returning home in a single quarter is 3.82-432 million yuan, an estimated increase of 3.3% Mel 16.8% over the previous quarter, and an estimated increase of 41.3% Mel 59.8% over the same period last year.

Brief comment

The company's products continue to be high-end. In 2020, the global market demand for BOPET film is more than 5 million tons, with a wide range of applications. China has gradually become the most important production base and consumer market for global polyester film products, and the production capacity of polyester film ranks first in the world. As an industry leader, the company has been working hard on BOPET, and the market share of polyester film ranks first in the world for three years in a row. Under the trend of the application of the new generation of information technology, the company has great foresight, seize the opportunity, vigorously distribute the field of new materials, and greatly improve the variety, quantity and quality of high-end products. Compared with the company's main business of conventional polyester films before 2019, as of the first half of 2021, the gross margin of the company's high-end film products has reached 75%. Compared with the ordinary film, the gross profit margin of the new material polyester film is about 10% more than 20%. With the further product upgrade and production capacity expansion of the company's BOPET, the cyclical impact of the ordinary film industry on the company is gradually weakened, and the company's profitability continues to increase.

The expansion of optical film contributed to the take-off of the annual performance, and the profit of Q4 reached an all-time high. Since 2021, the company has steadily promoted the construction of 200 million square meters of optical film project. with six production lines delivered and put into production this year, the company's BOPET production capacity and output are expected to increase by 50% and 20% respectively in 21 years, with a solid leading position in the industry and supporting the rapid growth of performance. With the vigorous development of the downstream panel industry and photovoltaic industry, the boom of high-end BOPET materials continues, the high-quality core resources of the superposition company are gradually tilted to the high-margin new materials business, the high-end production capacity is steadily expanded, the product structure is continuously optimized, and the company's net profit increases year after year, from 121 million yuan in 2015 to 721 million yuan in 2020, with a compound growth rate of 43%. In 2021, the net profit of homing is expected to reach 13.6-1.41 billion yuan, an increase of 88% Mel 95% over the same period last year, of which Q1, Q2 and Q3 are expected to achieve a net profit of 2.76,3.28 and 370 million yuan respectively, and Q4 is expected to achieve a net profit of 3.82-432 million yuan. compared with the previous forecast, the profit in a single quarter reached an all-time high, and the performance level continues to lead the industry.

Judging from the Q4 single quarter, as of December 3, the average price of cost-side PTA and MEG was 5082 yuan and 5847 yuan per ton, up 47.2% and 53.5% respectively from the same period last year. Under the pressure of the sharp rise in raw material prices, the company insists on reducing costs and efficiency, promoting price comparison procurement, and steadily achieving the performance release of the new production line, supporting the company's Q4 performance growth against the trend. Driven by the rapid growth of the downstream photovoltaic and panel industry, the demand for the company's products is expected to continue to be exuberant. With the further release of new production capacity, the further increase in the proportion of high-end products, and the decline and downward transmission of superimposed raw material costs, the company's performance is expected to continue to increase. Gradually transformed from the original main functional packaging materials enterprises to optical, photovoltaic, information and other film materials innovative high-end enterprises.

The company's abundant cash flow supports the orderly progress of high-end polyester film projects, and the momentum of future performance growth is sufficient. The company steadily promoted the optical film project with an annual output of 200 million square meters. in the third quarter, the advance payment of the company increased by 122 million yuan compared with the previous quarter, and the project under construction increased by 380 million yuan. At the same time, benefiting from the thickening profits, while the project continued to invest money, the company's cash flow still rose slightly. As of September 30, the company's cash and equivalents were 949 million yuan, an increase of 11 million yuan compared with the second quarter and 78 million yuan over the same period last year, providing strong support for future project construction. The 200 million square meter optical film project is expected to achieve 300000 tons of production capacity by the end of the 21st year, of which 80 percent can be used for the production of new materials such as optical diaphragms. In the first half of 22, the company expects another 200000 tons of functional film capacity to be delivered, and the project construction is progressing steadily, injecting new momentum into 22 years of performance growth. At the same time, with the acceleration of photovoltaic installation, the company actively plans to develop new energy materials and strive to achieve a production capacity of 2 million tons and an output value of 20 billion during the 14th five-year Plan period. Under the excellent cash flow condition, the smooth operation of the company and the orderly progress of project construction have a strong guarantee. By 2022, the company's BOPET capacity is expected to expand significantly, and the output growth rate is expected to reach 40%. With the gradual release of high-end polyester film project capacity, the company's performance growth is expected to ignite a new engine, the future high-speed growth momentum is sufficient, the prospect can be expected.

Per capita income and profits are in the forefront of the industry, and equity incentives contribute to high-quality development. The per capita income of the company in 2020 and the first three quarters of 2021 is 318 yuan and 2.67 million yuan respectively, and the per capita profit is 45 yuan and 610000 yuan respectively. In order to further stimulate the enthusiasm of employees, the company launched an equity incentive plan in 2021 to implement equity incentives for the company's directors, senior managers, core managers and core business backbone personnel. On August 11, the company announced that it had completed the grant and registration of stock incentive restricted shares, which were derived from shares repurchased from the secondary market at a grant price of 6.98 yuan per share. According to the estimation of the company, the total cost of the incentive scheme is estimated to be 83.1841 million yuan, and the amortization of 2495.52 yuan, 2495.52 yuan and 33.2736 million yuan from 2021 to 2023 is expected. The incentive plan has three characteristics: 1 it has a clear corporate performance target as a guide, specifically taking the growth rate of net interest rate as an indicator, and taking the net profit in 2021 as the base, the growth rate of net profit in 2020-2023 is not less than 60%, 110% and 160%, respectively. It fully reflects the company's determination and confidence to maintain sustained high growth. (2) it is divided into two aspects: corporate level and individual level, which is more comprehensive and more operable. (3) it covers a wide range of people, and the company now has 1591 employees. The incentive program covers 251employees, accounting for 16%, of which 11 executives get restricted stock (17%). Core managers, core technical (business) personnel, backbone employees, etc., a total of 240people get restricted stock, accounting for 83%. The plan effectively binds the interests of shareholders, the interests of the company and the personal interests of the core team together, fully mobilize the enthusiasm of personnel, and contribute to the longer-term development of the company. On the good basis of per capita income and profit-making leading the industry, the company strives for development, gradually establishes a sound long-term incentive mechanism, superimposed product structure upgrading, higher degree of automation, the company's high-quality and stable development momentum.

Profit forecast and valuation: considering the gradual launch and climbing of new production capacity of high-end functional film in 22 and 23 years, the company's net profit forecast for 2021, 2022 and 2023 is 1.4 billion yuan, 2.02 billion yuan and 2.67 billion yuan respectively, EPS is 1.21,1.74 yuan and 2.31 yuan respectively, PE is 23.0X, 16.0X and 12.1x respectively, and the target price is 38.8 yuan per share, maintaining the "buy" rating.

Risk analysis: the project production is not as expected, and the downstream demand is not as expected.