In 2021, the revenue of the company's high-end optical film and photovoltaic backplane products is growing rapidly, profitability is under short-term pressure, and it is expected to be repaired in 2022. With the continuous optimization of the structure of optical film products, gradual mass production of new products, and the completion of new production capacity, the performance of the company is expected to re-enter the fast track. We predict that the EPS of the company in 2022-2024 will be 0.80 PE 1.19 yuan 1.50 yuan. With reference to the valuation level of the comparable company, we will give the company 23 times PE in 2022, corresponding to the target price of 18 yuan, and maintain the "buy" rating.

Revenue in 2021 is + 35.51% compared with the same period last year, and profitability is under short-term pressure due to raw materials and yield climbing. In 2021, the company achieved revenue of 1.925 billion yuan, + 35.51% compared with the same period last year, of which the revenue of high-end optical film and photovoltaic backplane products was + 84.71% and 97.37% respectively compared with the same period last year. The net profit of returning to home / deducting the net profit of non-return to home is 1.19 / 94 million yuan, which is-12.83% and 15.40% compared with the same period last year. The decrease in profit is mainly due to the rise in the price of raw materials, the climbing of the yield of new products such as three-layer composite film and other factors, and the gross profit margin decreases 5.61pcts compared with the same period last year. 2022Q1 achieved revenue of 516 million yuan, year-on-year + 35.28%, month-on-month ratio-12.82%; net profit of 38 million yuan, + 15.42% year-on-year, + 125.32% month-on-month; gross profit margin increased 0.30pct. The repair of profitability needs to be observed in the annual dimension.

The structure of optical film products has been optimized and the new products have been promoted smoothly. In 2021, the company's optical film revenue was 1.317 billion yuan, + 22.43% compared with the same period last year, of which high-end optical films such as quantum dot film, composite film and COP accounted for 47.10%, which increased 15.88pcts compared with the same period last year. Structure optimization mainly benefited from the improvement of permeability of high-end display technologies such as quantum dots and Mini-LED. The company actively promotes and optimizes a composite film to replace brightening film and diffusion film assembly, saving labor for downstream customers and further thinning the backlight module. New products, OCA optical glue to achieve small-scale mass production delivery, RG film has been a small batch of trial production, smooth film is currently in the customer testing stage, small-size optical film has passed a number of brand machine certification, is expected to contribute more profits for the company in the next few years.

Photovoltaic backplane rapid growth, layout packaging film to improve the industrial chain. In 2021, the company's photovoltaic backplane product income was 518 million yuan, + 97.37% compared with the same period last year. It achieved delivery to many leading companies in the component industry, and increased its share in customers'P-type and TOPCon component products. TPO, transparent backplane and other new products also passed the verification and mass production delivery of Jingke, Longji and other customers. The company has invested in the construction of POE packaging film production line (both packaging film and backplane film are auxiliary materials for photovoltaic modules) to improve the company's photovoltaic industry chain, consolidate and further enhance the company's competitive position in the field of photovoltaic module accessories.

Foreign investment + independent research and development to create a functional film platform. In terms of foreign investment, the company distributes upstream PET base film, LCP film-grade resin and film (5G application), OLED light-emitting materials, silicon-based OLED micro display technology, fully integrating resources, technology, market and other advantages, and achieving coordinated development with the company's existing business. In terms of independent research and development, the company is committed to the accumulation and precipitation of independent coating technology and formulation technology, to enhance the strength of research and development, and to actively promote the research and development and testing of functional film products in emerging fields. new products include barrier films, protective films, semiconductor films, medical films and other materials. While maintaining a leading position in the optical film industry, the company is actively building a functional film platform.

Risk factors: raw material price fluctuation risk; new business development is not as expected; downstream demand is not as expected.

Investment suggestion: the company is a global leader in high-end display thin films. Through overseas investment and independent research and development, it is a long-term opportunity to build a functional thin film platform and layout thin film materials while maintaining a leading position in the optical film industry. Taking into account the impact of the rise in raw materials and the climbing of the yield of new products, we reduce the company's 2022-2023 net profit forecast to 209 million yuan (the original forecast is 310 million yuan 385 million), and the new 2024 net profit forecast is 394 million yuan, corresponding to the 2022-2024 EPS forecast of 1.1950 yuan. With reference to the valuation level of the comparable company (selecting functional film materials and photovoltaic film enterprises Stick, Foster, Haiyou new materials as comparable companies, based on the Wind consensus expectation of 23 times the average PE in 2022), give the company 23 times PE in 2022, corresponding to the target price of 18 yuan, and maintain the "buy" rating.