Investment highlight
For the first time, Zhongyi Science and Technology (301150) rated the outperforming industry with a target price of 106.00 yuan, corresponding to a price-to-earnings ratio of 23.8 based on the relative valuation method. As a rising star of lithium copper foil, the company is deeply bound to the Ningde era, and the localization of equipment is leading. We are optimistic about the company's long-term development prospects. The reasons are as follows:
The gross profit per unit is in the forefront of the industry, and the localization process of copper foil equipment is in the lead. The company's product structure continues to be optimized, and the sales of double-sided light 6-micron lithium copper foil products with high profitability occupy a dominant position; the improvement of the rate of quality products leads to a decline in unit manufacturing costs and further increases the level of gross profit margin. 1H21 lithium foil and standard foil have a gross profit of 27,000 yuan per ton respectively, ranking in the forefront of the industry. At present, the middle and high-end copper foil of the same industry company mostly uses imported cathode roll equipment. Under the background of the bottleneck of production capacity of cathode roll equipment in Japan, the company uses domestic equipment earlier and has begun to produce 6 μ m copper foil on a large scale by virtue of its strong independent optimization capability. the process of equipment localization is ahead of the industry.
Deep binding downstream quality customers, sustained and stable growth can be expected. In 2019, the company began to supply lithium copper foil in Ningde era on a large scale, and gradually deepened its cooperation with it. From 2019 to the first half of 2021, its sales revenue accounted for 46.93% of the company's operating income from 5.72%. At present, the company mainly sells double-sided light 6 μ m lithium electric copper foil products to Ningde era, and we think there is still much room for improvement in the company's internal supply share in Ningde era in the future. In addition, the company has mastered the batch production capacity of 4.5 μ m lithium copper foil, and has delivered related orders in small batches. at present, the industrialization process of 4.5 μ m copper foil in Ningde era is the industry leader, and the company has the potential to increase unit profit by increasing the proportion of extremely thin copper foil shipments in the future.
"standard copper foil + lithium copper foil" two-wheel drive, help through the industry cycle. The company also has lithium copper foil and standard copper foil production capacity, some production lines can take into account the production needs of standard copper foil and lithium copper foil, and can achieve flexible production capacity conversion. The company's standard copper foil products are still in continuous iteration, continuously developing reversal copper foil, 8-10 μ m standard copper foil, high-frequency high-speed copper foil, in which high-frequency high-speed copper foil has a good import substitution prospect in 5G base stations, IDG and other scenarios.
What is the biggest difference between us and the market? The market is worried about the deterioration of the copper foil industry, we believe that the company relies on customer channel advantage, equipment supplier binding advantage, medium-term is expected to grow steadily.
Potential catalyst: the introduction of new downstream major customers, copper foil processing fees rise.
Profit forecast and valuation
We estimate that the EPS of the company in 22-23 is 4.46,7.26 yuan, respectively, and the CAGR is 38.6%. The current market capitalization corresponds to a 23-year price-to-earnings ratio of 20.0 Sterling 12.3 times 22 pound. For the first time, it covers giving a "outperform industry" rating and a price tag of 106 yuan, corresponding to a price-to-earnings ratio of 23.8 and 14.6 times 2023, a potential increase of 20%.
Risk.
The market competition aggravates the risk, the processing fee fluctuation and the business performance decline risk, the raw material price fluctuation risk, the single customer occupies the relatively high risk, the technological innovation risk.
