The company has spun off the cultural industry and focused on high-precision copper plate and strip business, and its production capacity is expected to double within two years. The company's products are mainly used for connectors, leading the industry in profitability. Benefiting from the rapid development of emerging fields such as new energy and 5G, as well as domestic alternatives, the company is expected to usher in a revaluation.
Completely peel off the cultural industry and focus on high-precision copper strip processing business. The company was founded in 1998 and has been ploughing the copper processing field for many years. It is the first listed company in the domestic copper alloy processing industry. In 2015, the company tried to enter the film and television culture industry. In 2018, the company formulated the "development strategy of stripping the cultural industry and ploughing the copper processing industry". In 2020, it completely spun off the film and television culture business and returned to the copper processing industry in an all-round way.
Connector with high-precision copper strip faucet, production capacity is expected to double within two years. The company takes the initiative to peel off the backward production capacity of copper rod, wire, profiles and so on. at present, the copper-based alloy products are all high-precision copper plate and strip, with an annual production capacity of about 50,000 tons. The company plans to carry out technical transformation and expand the production capacity of the Wuhu production line this year. The planned annual production capacity of the Guangxi and Jiangxi copper belt projects are 2 and 18000 tons respectively. The Guangxi project was put into production at the end of last year, and the rest is expected to be completed and put into production in 2023. At that time, the annual production capacity of high-precision copper plate and strip is expected to be close to 100000 tons.
The profitability per ton leads the industry, and the tinplate production line further thickens the profits. With the release of high-precision copper strip production capacity in Wuxi and Wuhu bases, as well as the divestiture of low-end products, the profitability of copper-based alloy materials has increased rapidly, and the gross profit per ton has increased rapidly from 1209 yuan in 2016 to 6180 yuan in 2020. In addition, the company has the production capacity of reflux plating and hot-dip plating, with an annual production capacity of 8000 tons and plans to increase the production capacity of 10, 000 tons. It is expected to be put into production in the first half of the year, which can increase profits on the original basis. Taking into account the technical transformation of the company's old production line and the further optimization of the product structure and the scale effect brought by the new production line, the company's gross profit per ton is expected to continue to increase, which is expected to rise to more than 10000 yuan / ton in 2023.
The demand for copper strip for catalytic connectors in new energy, 5G and other emerging fields is developing rapidly. The downstream of copper strip is mainly used in connectors, shielding materials, lead frames and other products. Automotive and communications are the largest segments of connectors, accounting for 22% and 21%, respectively. Automotive electrification and intelligence have led to an expansion of demand for high-voltage connectors and high-speed connectors. compared with traditional fuel vehicles, the demand for connectors for new energy vehicles has increased significantly, while the speed increase of 5G applications has driven the demand for communication connectors and shielding materials. The global competition pattern of the connector industry shows a trend of centralization and localization. The company has been engaged in the industry for nearly 20 years and became a qualified supplier of Foxconn in 2004. and to Tyco, Morse, Ambofo, Jisten and other bulk supplies and a large share. With the advantage of stable and high-quality products, the company is expected to fully enjoy the dividend of domestic substitution in the future.
Give a "highly recommended-A" investment rating. It is estimated that the company's 2021-23 return net profit is 0.85 pound 1.66 / 370 million yuan, corresponding to the price-to-earnings ratio of 56-29-13, covering for the first time, giving a "highly recommended-A" investment rating.
Risk hint: the risk that the company's capacity expansion progress is not as expected, the demand for high-end alloy materials is not as expected, the risk of commodity price fluctuation, the risk of exchange rate fluctuation, the risk of international trade friction, the risk of high pledge ratio of major shareholders, etc.