Summary of events: on April 27, 2022, the company released its quarterly report for 2022, with a revenue of 1.112 billion yuan, an increase of 25%, a net profit of 127 million yuan, an increase of 94%, a ring increase of 52%, and a net profit of 110 million yuan, 80% and 39% respectively.

The rate of financial expenses decreased and the net interest rate increased. Gross profit margin: 22Q1 gross profit margin is 23.9%, same increase 2.2pcts, ring drop 1.7 pcts; net interest rate: 22Q1 net profit rate is 11.4%, same increase 4.1pcts, ring increase 4.5pcts.

Expense rate: the expense rate during the 22Q1 period of the company was 11.3%, a decrease in 2.1pcts compared with the same period last year, in which the rates of sales, management, R & D and financial expenses were 0.6%, 3.1%, 3.8% and 3.8% respectively, with year-on-year changes in-0.5pct,-1.0pct, + 2.3pcts and-2.9pcts. The reduction in the financial expense rate is due to the decline in the company's asset-liability ratio, which continues to decline steadily.

Production capacity continues to expand, and net profit per ton is expected to continue to grow. In 21 years, the company's annual copper foil sales were about 35100 tons, an increase of 72.74% over the same period last year. We speculate that 22Q1 copper foil shipments are about 9000 tons, slightly lower than Q4, mainly affected by the Spring Festival holiday. The company currently has a copper foil production capacity of 43000 tons. With the gradual commissioning of the two bases in Qinghai and Huizhou, the company's annual production capacity can reach 85000 tons. Taking into account the impact of the epidemic, we estimate that its shipment capacity is about 50,000-60,000 tons. The company's net profit per ton of 21Q4 is about 13,000 yuan / ton, and the 22Q1 is expected to be flat. Throughout the year, with the optimization of the company's asset structure and capacity expansion, its financial expenses per ton will continue to decrease.

Investment suggestion: we expect the company's return net profit from 2022 to 2024 to be 8.44,12.93 and 1.549 billion yuan, with an increase of 108%, 53% and 20%, corresponding to a valuation of 18,12 and 10 times PE. Taking into account the company's active production expansion, 4.5 micron copper foil has obvious first-mover advantages, maintaining the "recommended" rating.

Risk hint: new energy vehicle sales are not as expected; new capacity production progress is not as expected