The net profit of 1H22 was 2.3-250 million yuan, an increase of 79.6 percent over the same period last year. The company issued a forecast of 1H22 performance, and estimated that the net profit of 1H22 homing is 2.3-250 million yuan (YoY 79.6% Mel 95.2%), corresponding to the net profit of 2Q22 homing 1.34-154 million yuan (YoY 142% Mel 178%). It is estimated that the net profit of 1H22 deduction is RMB 1.75-195 million (YoY 41.2% 2Q22 57.3%), corresponding to the net profit of RMB 0.81-101 million (YoY 51.7% Mel 89.2%). In the background of weak global consumer electronics demand for 1H22, the company achieved high year-on-year growth, thanks to: 1) core customers Samsung mobile phone shipments against the trend, S series, folding series and other high-end models sell well, the company's aluminum structure production and sales increased significantly; 2) the price of 1H22 raw materials declined, superimposed the depreciation of RMB against the US dollar and other factors, the company's profitability improved.
The company's core customer Samsung smartphone shipments are growing against the trend, and high-end models are selling well. According to SA data, from January to May, the world shipped 50 million smartphones (YoY-9.3%), of which Samsung, the company's core customer of aluminum structural parts, shipped 120 million units (YoY: 2.7), which bucked the trend and ranked first in the world with a market share of 23.9%. According to IDC, 1Q22 Samsung shipped 11.29 million high-end models (including S series, Note series, Fold/Flip folding series, etc.) (YoY 10.4%).
The folding screen opens a new era of 3C terminal shape innovation, and the company's 7-series aluminum structure has a broad application prospect.
On the one hand, the folding screen expands the application scene of large-size display, on the other hand, it has gradually become the differential competition of the Android camp to promote the high-end brand. According to DSCC,21, global shipments of folding screen phones rose 254 per cent year-on-year to 7.98 million units; DSCC expects shipments to grow 123 per cent year-on-year to 17.77 million units in 22 years and 54.68 million units in 26 years (CAGR 47 per cent in 21-26). Under the guidance of Samsung, the leader of folding machine, many brand new folding machine projects adopt 7 series aluminum alloy materials. The company's 7 series aluminum alloy materials can be used in the hinges and aluminum frames of folding screen mobile phones, which has a broad space for growth.
The company will actively expand its production capacity and further enhance its order-taking capacity. In January 2022, the company announced plans to invest 5 billion yuan to build a "high-end manufacturing base project for high-precision consumer electronics and new materials" in Fuzhou, Fujian Province. it will add 250000 tons of recycled aluminum and round ingots, 60,000 tons of consumer electronic aluminum profiles and intensive processing, and 100000 tons of new aluminum alloy materials and intensive processing. The corresponding annual output value amounts to 16.5 billion yuan. The first phase of the project is planned to invest 1.218 billion yuan, and construction will begin in 2022 and is expected to be completed and put into production within three years.
Investment suggestion: we are optimistic about the rapid penetration of folding screen phones and the growth of sales of high-end models in core customers such as Samsung and Apple Inc to bring growth flexibility to the company's aluminum structure business. at the same time, we are optimistic that the company's continued expansion and production will improve order-taking capacity. We expect the company's 22-24 year-on-year net profit to increase by 43.1%, 30.0%, 26.0%, to 4.20, 546, and 688 million, corresponding to a "buy" rating of 16.8, 12.9, and 10.3 times PE for 22-24, respectively.
Risk tips: downstream demand is not as expected, the penetration of folding screen mobile phones is not as expected, and competition in the industry is intensified.
