Introduction to this report:
Driven by products such as composite films, quantum dot films, and photovoltaic backplate films, the company's revenue grew steadily. In the future, driven by the development of high-end display and photovoltaic industries, the company's performance is expected to reach a new level.
Key points of investment:
Maintain an “increase in holdings” rating. Considering that the pandemic has had a certain impact on demand in 2022, we lowered the company's performance forecast for 2022 and raised the company's 2023 performance forecast. The net profit for 2022-2024 is expected to be 2.29 billion (-0.08) million yuan, 316 (+0.12) million yuan, and 407 million yuan. Affected by the expansion of share capital, EPS was lowered to 0.87 (-0.14), 1.21 (-0.09), 1.55 yuan. Considering that the current market sentiment on panel upstream materials is pessimistic, the target price was lowered to 26.62 (-) 13.78) Yuan, corresponding to 22 times PE in 2023, maintaining the “increase in holdings” rating.
The performance was in line with expectations, and PV backplate film growth was strong. The company's revenue in 2021 was 1,925 million yuan, an increase of 35.51% over the previous year. Affected by asset impairment, raw material price increases, etc., net profit was 119 million yuan, a slight decrease over the previous year. 2022Q1 net interest rate recovered month-on-month. Under high costs and weak demand, net interest rate recovered to 7.28%, and profitability is expected to continue to be maintained in the future. Looking at product segments, photovoltaic backplate films have doubled, and the driving effect on performance will become more obvious in the future.
High-end displays and photovoltaic two-wheel drive, short-term demand disturbances do not change long-term trends. Currently, there are opinions in the market that the company's performance as an upstream of the display industry is closely related to the prosperity of the panel industry. We believe that the company's view has certain limitations: the switching of optical film from a single functional film to a composite film has increased the company's ability to be replaced domestically; the value of high-end film materials such as core layers and quantum dot films has increased dramatically, which is expected to gradually penetrate from high-end televisions to the middle and upper end, increasing the market size of the company's products; PV backsheet production capacity has increased, and customer expansion work is smooth. In the future, along with the rapid growth in industry demand, the overall performance is full of momentum.
Catalysts: Mini LEDs accelerate penetration; prices of upstream raw materials are reduced.
Risk warning: Risk of continued price increases for upstream raw materials; production expansion progress falls short of anticipated risks.