Event
The company issued the 2021 performance forecast on January 26. According to the announcement, in 2021, the company expects to achieve 286 million yuan in revenue, down 1.04% from the same period last year; the expected return net profit is 34 million yuan to 40 million yuan, down 66.45% and 71.48% from the same period last year; and the overall gross profit margin is expected to be about 51.43%, down 14.97 pct from the same period last year.
Comments:
The market of electromagnetic shielding film business is weak, and the profit is reduced by more expenditure on the cost side. The decline in revenue comes from two sources. On the one hand, according to DIGITIMES Research data, 1.32 billion smartphones were shipped worldwide in 2021, an increase of 6.1% over the same period last year, showing a sluggish trend in the peak season, affecting the sales of electromagnetic shielding films; on the other hand, the company reduced the price of its products in order to compete for market share.
New products, copper foil 2021Q4 put into production, the business contribution income of about 42 million yuan. The decline in gross profit margin is mainly due to the climbing loss of copper foil business and the decline of gross profit margin of electromagnetic shielding film. On the expense side, the company increases rapidly due to equity incentive expenditure, increased R & D investment and depreciation of the Zhuhai factory.
The launch of the three new products forms a product matrix, and the homology of technology and customers promotes the promotion of new products. Benefiting from the "light and thin" development trend of electronic products, the fine development of FPC linewidth / line distance has increased the demand for non-glue two-layer FCCL and extremely thin FCCL; in the field of hard board, the fine development of HDI, SLP, IC carrier lines also drives the demand for stripping ultra-thin copper foil; at the same time, benefiting from the development of high density, the demand for thin film resistors can be reduced. Through raising investment and its own funds, the company has built three new products: ultra-thin copper clad laminate, ultra-thin copper foil and thin film resistor. at present, ultra-thin copper foil has been put into production climbing stage, and other projects are also under construction. Benefiting from the company's technology and customer homology, all kinds of new products are expected to be successfully transformed into a new engine for the company's growth.
Profit forecast and valuation: we are optimistic that the company will expand the business layout of ultra-thin copper foil, extremely thin flexible copper clad laminate and thin film resistors. Taking into account the lower-than-expected production progress of the new production line, we reduce our profit forecast and target price. It is estimated that the company's 2021 EPS 2022 pm 2023 will be 0.49max 1.25max 2.06 yuan respectively, while the current stock price corresponds to 156.72 pm 60.98 pm PE 37.01 times, maintaining the "buy" rating.
Risk hints: production expansion and climbing progress are not as expected, competition is intensified, and customer certification is not as expected.