occurrences
Crude oil and PTA prices have fluctuated downward: since July, international oil prices have fluctuated downward, and PTA prices have declined accordingly. The average price of fuel oil is 106.06 US dollars/barrel, -9.7% compared to the average price in June; the average price of PTA is 6501 yuan/ton, -8.76% from the average price in June. The pressure on the company's raw material side is reduced, and product profits are expected to improve.
Brief review
Crude oil and PTA prices have fluctuated downward, and the company's profitability can be expected to increase. PTA, the main raw material for PET films, is highly correlated with crude oil prices. High crude oil prices in the first half of the year put pressure on the cost side of BOPET film companies. Since July, international oil prices have fluctuated and declined, PTA prices have declined accordingly, and the decline in raw material prices will improve the company's gross profit level. As of July 15, the price of oil was 101.16 US dollars/barrel, down 13.9% year-on-year from the average price of 117.47 US dollars in June; the PTA price was 5,650 yuan/ton, down 20.7% from the average price of 7125 yuan/ton in June. The average price of oil since July was 105.73 US dollars/barrel, down 10.0% from June; the average PTA price in July was 6,484 yuan/ton, -9.0% from June.
PET copper foil accelerates research and development to advance access to high-quality tracks. Copper foil is the anode material carrier and anode fluid collector of lithium batteries. It is also a key material that affects the specific energy and cost of lithium batteries. The company has been developing PET copper foil for many years. Currently, the product is in the downstream verification stage, which is expected to release production capacity quickly after the verification is passed. Compared with traditional copper foil, PET copper foil has many advantages such as low cost, high energy density, high safety, and long life, and is expected to replace the large-scale application of traditional copper foil. As a high-end new material, the production of PET copper foil has high technical barriers. In the PET copper foil production process, the first step is to generate a 4.5um PET film. The second step is to use magnetron sputtering equipment to sputter copper onto this insulating polymer layer through vacuum magnetron sputtering to metallize the PET film, which is a non-metallic material. The third step is to use electroplating equipment to coat both sides of the metallized PET film with copper on both sides of the metallized PET film, increasing the thickness of both sides of the film to 1um, and finally forming 6.5 um PET copper foil.
Lithium batteries benefit from broad prospects for new energy applications, and PET copper foil market space can be expected. Under the dual carbon strategy, China's new energy industry is developing rapidly, demand for lithium batteries has maintained a high increase under the rapid development of new energy vehicles, and the PET copper foil market has broad application prospects. According to CITIC Construction Investment's New Energy forecast, in 2022, the global battery installed capacity is expected to reach 900 GW, and the estimated global battery installed capacity in 2023 is 1193 GW. The estimated PET copper foil penetration rate is 3%. The corresponding demand for PET copper foil is about 4.7 billion square meters, and the market revenue space is about 3.7 billion yuan. By 2025, the global battery installed capacity is expected to reach 2209 GW, and the penetration rate of PET copper foil will increase to 10% at that time. The corresponding demand for PET copper foil is about 22.1 billion square meters, and the market size is about 23 billion yuan. The company placed PET copper foil on a high-quality racetrack in advance. The technical advantages and integrated layout of the industrial chain highlighted the company's competitiveness in the PET copper foil field.
New capacity projects are progressing steadily, and the company's internal growth momentum is strong. Since 2021, sales in the company's four high-end materials sectors of optics, new energy, information, and thermal shrinkage have further increased. The impact of cyclical fluctuations in the ordinary polyester film industry on the company's profits will become weaker and weaker, further moving from traditional ordinary film companies to new high-end film companies. The remaining 200,000 tons of production capacity from the company's 500,000 ton new production line were gradually put into operation in the first half of '22. Furthermore, from the second half of this year to next year, the company will release additional production capacity such as reinforced PET substrates and heat shrinkable films. The share of high-end functional films in the product structure will rise further, and the gross profit share of high-end products is expected to rise from 75% last year to 90% in '22. Along with the expansion of the company's production capacity for high-end film products such as optics and new energy, as well as product upgrades and product restructuring, the scale dilution effect is conducive to cost optimization and further enhances the company's core competitiveness.
Profit forecast and valuation: The company's net profit for 2022, 2023, and 2024 is estimated to be 1.95 billion yuan, 2.67 billion yuan, and 3.38 billion yuan respectively, while EPS is 1.7, 2.3, and 2.9 billion yuan respectively. Corresponding to the current PE is 12.2X, 889X, and 7.0X respectively, maintaining the “buy” rating.
Risk warning: Project commissioning falls short of expectations, downstream demand falls short of expectations, etc.