Description of the event

The company revealed that net profit attributable to shareholders of listed companies achieved in the first half of 2022 will increase by 42 million yuan to 50 million yuan compared with the same period last year, an increase of 48.45% to 57.68% over the same period last year.

Analytical judgment:

Downstream demand is strong, and the company's performance continues to grow

According to the company announcement, net profit attributable to shareholders of listed companies is expected to be 128 million yuan to 136 million yuan in the first half of 2022, an increase of 48.45% to 57.68% over the previous year. The company's net profit for Q2 alone was 64 million yuan to 72 million yuan, an increase of 14% to 28% over the previous year, and an increase of 0%-14% over the previous month. Due to the epidemic and other reasons in the second quarter, the consumer market was relatively weak, causing the company's operating rate to show a certain downward trend. However, market demand for new energy power generation and new energy vehicles has maintained a good growth momentum, and the company continues to optimize the product structure and deepen lean management to ensure maximum order delivery. At the same time, the company overcame the impact of the COVID-19 pandemic and government project implementation, etc., and made concerted efforts to efficiently organize production and operation and maximize production capacity to ensure that the scale of revenue did not decline.

The third quarter entered a period of full prosperity, and it is expected that the company's profits will continue to increase. We expect that as we enter the third quarter, the electricity bill for the company's production base in Sichuan will be drastically reduced. Since the vast majority of the cost composition of electrode foil is electricity, the high water period in the third quarter will drive the company's profitability to increase rapidly, so the company's products have a great advantage over the costs of other manufacturers that use coal to generate electricity. At the same time, the company's fund-raising projects will reach production one after another this year, and production capacity will increase, thereby further improving the company's profitability.

Investment advice

Considering the current macro and industry demand situation, as well as the commodity and energy price situation, and maintaining the company's 2022-2023 profit forecast, we forecast the company's 2022-2024 revenue of 2,070 million yuan, 2,570 million yuan and 3.142 billion yuan respectively; we maintain the company's net profit forecast for 2022 to 2023, and we forecast the company's net profit to the mother from 2022 to 2024 to 316 million yuan, 403 million yuan and 524 million yuan; we maintain the company's 2022- 2024 net profit According to the 2023 EPS forecast, we forecast the company's 2022-2024 EPS of 1.32 yuan, 1.69 yuan, and 2.19 yuan. Corresponding to the closing price of 22.91 yuan/share on July 15, 2022, PE was 17x, 13x, and 10x respectively, maintaining the “buy” rating.

Risk warning

The installed capacity of photovoltaics fell short of expectations; sales of new energy vehicles fell short of expectations; higher prices of upstream raw materials increased company costs; electricity restrictions affected the company's commencement of construction; repeated epidemics affected the supply of raw materials.