The company released the first quarter 2022 results report, the company achieved operating income of 2.35 billion yuan in the first quarter of 2022, + 4.4% year-on-year, return to the mother net profit of 120 million yuan, year-on-year-2.0%, deducting non-net profit of 116 million yuan,-5.6%. We believe that it is mainly affected by the sharp rise in the price of upstream raw materials. As one of the earliest companies in China to develop aluminum-plastic film and have mass production capacity, the company has advanced technology and strong profitability. It has researched and mass-produced fourth-generation products, and the shipment volume has increased significantly, which is expected to benefit from the rapid development of the industry. In addition, the company's packaging business has maintained steady growth and remarkable competitiveness. The company's growth drivers are clear, continue to recommend, and maintain a "buy" rating.
Event: the company released its quarterly report for 2022 on April 28: revenue in the first quarter of 2022 was 2.35 billion yuan, + 4.4% year-on-year, and net profit was 120 million yuan,-2.0%, and 116 million yuan, 5.6%, respectively.
In this regard, our comments are as follows:
In the first quarter of 2022, the results were basically in line with expectations, and the company's gross profit margin gradually got rid of the impact of rising prices of raw materials. The company's revenue in the first quarter of 2022 was 2.35 billion yuan, + 4.4% year-on-year, and the net profit was 120 million yuan,-2.0% year-on-year, and the gross profit margin was 19.7%, down 0.6% from the same period last year. We think it is mainly due to the continuous increase in the price of upstream raw materials: in the first quarter of 2022, the price of the company's main raw materials, such as PET slices, increased by 39.8% compared with the same period last year. In order to cope with the increase in the price of raw materials, the company raised the price of some products, with the highest price increase of PET bottles, an increase of 24% over the same period last year. The margin of gross profit margin improved, up 1.1 percentage points from the previous month. We believe that raw material prices are expected to fall in the second half of 2022 and the company's profitability may pick up further.
The packaging business has made steady progress, and the volume and prices of some products have risen. In 2021, the company's beverage packaging business opened up new customers such as Yuanqi Forest and Xi Tea; in terms of strategic customers, it realized the business growth of Coca-Cola Company system, and reached a soda bottle embryo cooperation project with Danone. Paper packaging business, sales to strategic customers (such as Parkson, McDonald's Corp, etc.) and new customers (Sabre, etc.) have increased significantly. In the first quarter of 2022, the revenue of PET bottle and bottle blank business was 372 million yuan, + 8.03% compared with the same period last year, and the revenue of plastic anti-theft cap business was 123 million yuan. Compared with the same period last year, the unit price of PET bottle / PET bottle blank / plastic anti-theft cap increased by 24.0%, 9.5% and 0.6%, respectively.
The rapid growth of aluminum-plastic film, the introduction of ATL and BYD as strategic investors. Subsidiary Zijiang New Materials 22Q1 sells 8.77 million square meters of aluminum-plastic film; in 2021, it sold 22.17 million square meters of aluminum-plastic film, + 49% of which accounted for 55% of the sales of soft-package batteries for power and energy storage. In the second half of 2021, Zijiang New Materials introduced ATL and BYD to become strategic investors. We believe that by entering BYD's DM-i blade battery supply chain, it is expected to keep growing with BYD's battery volume; ATL is a high-end consumer battery company, and the company is going further into the field of high-end aluminum and plastic film, which will enhance the competitiveness of the industry and narrow the gap with foreign giants.
The unit price of aluminum-plastic film increased compared with the same period last year, and the net profit per flat was basically the same. Subsidiary Zijiang new material 22Q1 aluminum plastic film sales price of 16.7 yuan per square meter, we expect the net profit of Shan Ping to be the same as last year. In 2021, the price of aluminum-plastic film per square meter is 16.4 yuan, + 6% compared with the same period last year. We think it is mainly due to entering power battery customers, the unit price is higher than 3C aluminum-plastic film; the net profit in 2021 is 2.99 yuan, + 2% year-on-year, and gross profit margin is 32.4%, down 2.8 percentage points from the same period last year. Under the background of the rise in the price of raw materials, the net profit of Shan Ping is still basically flat, reflecting the strong management ability of the company.
Risk factors: soft bag battery applications are not as expected; customer sales are not as expected; new customer development is not as expected; at a disadvantage in the competition (such as competitors breaking through technology and production bottlenecks); company profitability is not as expected; the impact of the epidemic is higher than expected.
Investment advice: taking into account the impact of commodity prices and the domestic epidemic on the company's profitability, we downgrade the company's 202lash 2023max 2024 net profit forecast to 615x10.01 million yuan (the original forecast is 663869max 1.03 billion yuan), and the current price corresponds to 2022lash 2023max times PE on 11-8-7. Domestic flexible package batteries are expected to usher in growth, especially in the field of lithium iron phosphate, which will drive the market demand for aluminum-plastic film on a large scale, and enhance the advantages of domestic enterprises. Aluminum-plastic film is expected to become the next domestic lithium material. As one of the earliest domestic enterprises to develop aluminum-plastic film and have the capacity of mass production, the company is technologically advanced and is expected to benefit from domestic substitution.
Using segment valuation, reference packaging companies (Baosteel Packaging and Hexing Packaging) have a consensus expected average valuation of 9.2 times PE in 2023, while aluminum-plastic film comparable companies (Tiannai Technology, Ningde Times, Yishitong) are estimated to be 23 times PE in 2023, taking into account the company's leading position in packaging business and the rapid growth of aluminum-plastic film business. Give the company packaging business 13 times PE in 2023 (expected profit of 680 million in 2023), aluminum and plastic film business 25 times PE valuation in 2023 (expected net profit of 130 million equity in 2023), target price of 8 yuan, continue to recommend, maintain the "buy" rating.