[matters]
According to the announcement of the pre-increase in the results of the half-year 2022, 2022H1 achieved a net profit of 2.3-250 million yuan, an increase of 79.61% over the same period last year. The company realized deduction of non-net profit of 1.7-190 million yuan, an increase of 41.18% and 57.34% over the same period last year.
In the first half of 2022, there is a strong demand for middle and high-end consumer electronics products, especially folding screen mobile phones. The aluminum structural materials produced by the company have been mainly used in high-end models such as mobile phones, tablets and laptops. As a result, the company's orders for mobile phones and notebooks increased in the first half of the year, and production and sales increased significantly.
[comments]
The global consumer electronics middle and high-end market demand is strong. The company's main products are aluminum alloy materials for consumer electronics aluminum structures. at present, the major mainstream manufacturers are high-end flagship mobile phones designed with high-strength aluminum alloy frames + glass or ceramic backboards, among which 7-series high-strength aluminum alloy frames are the mainstream trend. According to Counterpoint Research data, sales of 2022Q1's global ultra-high-end mobile phone market increased by 164% compared with the same period last year.
As a new form of smart phone development, the demand of folding screen mobile phone is growing rapidly. Shipments of folding screen phones reached 8.9 million in 2021, up 148 per cent from a year earlier, according to Canalys. Samsung is the current global smartphone market share, folding screen phone market share of the first brand, the company's research and development, with independent intellectual property rights of the new 7-series aluminum alloy material has been greatly affirmed by Samsung customers, has successfully achieved mass production on Samsung folding screen phone Flip3, Fold3, currently only the company's 7-series aluminum alloy products have obtained Samsung certification, is the exclusive supplier of such products in China Will maximize the growth dividend of the folding screen market. According to the Cinno Research report, Samsung will be able to purchase parts and components to meet shipments of 1500-20 million folding screen phones in 2022, more than doubling the number of mobile phones shipped in 2021. The company actively cooperates with customers to carry out pre-material research and development, and the new products in the customer folding screen will still maintain the core position and will directly benefit.
Aluminum prices entered the downward channel, and the company's profits continued to be released. Based on the company's industry characteristics, product technical difficulties and market competition environment, the company's product price is cost-oriented in accordance with the principle of "benchmark aluminum price + processing fee", while taking into account factors such as the degree of market competition. Negotiate with customers to determine the price. According to the aluminum price of the Yangtze River non-ferrous market, the 2022Q2 aluminum price has dropped from 22720 yuan / ton to 19230 yuan / ton, and the price of raw materials during mass production has dropped, which is conducive to the continuous release of the company's profits.
Steady progress in production expansion, seize the opportunity for the development of high-end materials. In January 2022, according to the company's announcement, in order to expand production capacity to meet the strong demand downstream and to meet the needs of rational layout of the production base, a total investment of 5 billion yuan was proposed for the construction of "250000 tons of recycled aluminum and round ingots project", "annual output of 80,000 tons of consumer electronic aluminum profiles and intensive processing project" and "annual output of 100000 tons of aluminum alloy new materials and intensive processing series project". The project is divided into three phases. The construction period is expected to be 6 years. The first phase of the project is expected to start from 2022, with an estimated investment of 1.218 billion yuan for the "annual production of 100000 tons of recycled aluminum and round ingots" and "60,000 tons of consumer electronic aluminum profiles and intensive processing project".
The implementation of the high-precision consumer electronics and new materials high-end manufacturing base project will help to expand the company's capacity scale, solve the problem of insufficient production capacity in the current peak season, and further increase the market share of the products. According to the announcement of the progress of the wholly-owned subsidiary investment construction project disclosed by the company on May 26, 2022, the "Business license" has been obtained, various permits have been obtained and the site has been leveled. Pile foundation construction, design drawing review and construction procedures are being carried out, and the progress of production expansion is making steady progress.
[investment advice]
The company ploughs aluminum alloy materials and has successfully developed a variety of 6-series and 7-series aluminum alloys and successfully applied them to many projects of Samsung, Apple Inc and other global head brands. A new type of 7 series aluminum alloy structure products developed by the company has been greatly recognized by Samsung customers and has achieved mass production on Samsung folding screen mobile phones Flip3 and Fold3. At present, only the 7 series aluminum alloy products produced by the company have obtained Samsung certification and are the exclusive suppliers of such products in China. According to the previous customer new product release rhythm, the second half of the new product release is coming, the company actively cooperates with customers to carry out pre-material research and development, and is expected to maintain a core position in customer new products, which will directly benefit from the rapid growth of demand for folding screen mobile phones. Taking into account the decline in aluminum prices of upstream raw materials, we raise the company's gross profit margin, adjust the expense rate and non-operating income during the period. It is estimated that the company's operating income in 2022-2024 will be 26.21,36.12 and 4.852 billion yuan respectively, and its net profit will be 4.81,6.48,870 million yuan respectively. The corresponding EPS is 0.92,1.24,1.67 yuan per share respectively, and the corresponding PE is 15,11,8 times respectively, maintaining the "buy" rating.
[risk Tip]
Market demand is lower than expected, and shipments of folding screen phones are lower than expected.
The introduction and expansion of new products is not as expected, and the progress of new customer development is not as expected.
The progress of production expansion is lower than expected.
The price of upstream raw materials fluctuates violently.
Exchange rate fluctuates violently