Main points of investment:
The rapid increase in downstream demand has led the copper foil industry to enter a tight supply and demand situation since 2021. The company will seize the industry opportunities and actively expand production, which will contribute to the improvement of the company's future performance.
Profitability improved significantly after deep ploughing in the field of copper foil
The company has been ploughing in the copper foil field for many years, and its technical level is in the forefront of the industry. the company's main products are copper foil products. In 2021, the company's operating income was 4.446 billion yuan, an increase of 106.32% over the same period last year, and its net profit was 405 million yuan, an increase of 7421.93% over the same period last year. Copper foil products contributed about 92% of revenue and 92% gross profit, the company's gross profit margin and net profit margin significantly rebounded, profitability greatly improved.
Short-term supply and demand tension will continue, processing fees have strong support due to the long production cycle of copper foil expansion, the rapid increase in demand for power batteries and energy storage batteries has led to a tight supply and demand situation in the industry, and it is expected that the tight supply and demand situation will continue in 2022. There is a strong support for the processing fees of copper foil products.
Lead the technology industry and actively build production capacity
At present, the company can supply 4.5 μ m copper foil in batches, has a batch production capacity of 4 μ m copper foil, and has successfully developed 3.5 μ m copper foil products in 2021. The company is in an industry leading position in the field of ultra-thin copper foil. According to the company's current production capacity planning, the company's design capacity is expected to reach 70, 000 tons in 2022, 140000 tons in 2023, and 170000 tons in 2024. With the continuous improvement of downstream demand, it is expected that the company's future lithium copper foil product shipments will be greatly increased.
Earnings forecast, valuation and rating
We expect the company's operating income from 2022 to 2024 to be 6.672 billion yuan, 9.505 billion yuan and 12.765 billion yuan respectively, an increase of 50.08%, 42.46% and 34.30% respectively over the same period last year, and a 3-year CAGR of 42.13%. The net profit was 775 million yuan, 1.246 billion yuan and 1.685 billion yuan respectively, which increased by 91.12%, 60.88% and 35.30% respectively over the same period last year. The 3-year CAGR was 60.84%, and the corresponding EPS was 0.44,0.71 and 0.97 yuan respectively. The company's value per share measured by the absolute valuation method is 14.95 yuan, which is 19.47 times higher than the average valuation of the company. Combined with absolute valuation method and relative valuation method, we give the company 33 times PE in 2022, with a target price of 14.52 yuan, covering for the first time and giving a "buy" rating.
Risk hint: downstream demand is less than expected risk, production expansion progress is not as expected as expected risk, industry competition aggravates risk