1H22 performance is in line with our expectations
The company announced 1H22 results: revenue 4.624 billion yuan, year-on-year-5.1%; return to the mother net profit 233 million yuan, year-on-year-29.5%; deduction of non-return net profit 230 million yuan,-30.0% year-on-year. The performance is in line with our expectations.
From a quarterly point of view, the company's Q1/Q2 achieved revenue of 2.353 billion yuan / 2.27 billion yuan respectively, with a year-on-year change of + 4.4% CPM 13.2%, and a net profit of 121 million yuan / 111 million yuan, down 2.0% and 46.0% respectively from a year earlier.
Trend of development
The income affected by the epidemic has declined, but the aluminum-plastic film business continues to grow at a high level. 1H22's revenue fell 5.1% year-on-year, according to business: 1) Aluminum-plastic film industry continues to be booming, the company's production capacity is fast climbing, customers continue to develop, and the company's 1H22 aluminum-plastic film business has achieved rapid growth of 301 million yuan, an increase of 63.8% over the same period last year, and sales of 18.02 million square meters, an increase of 72.3% over the same period last year. 2) other business: due to the impact of the domestic epidemic in the second quarter, the domestic beverage demand dropped somewhat, and the epidemic in Shanghai also had a certain impact on the company's operation and production, and 1H22's packaging business and trade business income was under pressure.
The rise in raw material prices affects profitability. The company's 1H22 gross profit margin fell 1.24ppt to 20.5% year-on-year, on the one hand, due to the sharp rise in the prices of upstream PET, CPP, aluminum and other raw materials, and on the other hand, the domestic epidemic affected capacity utilization. In terms of the expenditure rate during the period, the 1H22 sales / management / finance / R & D expense rate changed from the same period last year-0.3ppt/+0.2ppt/-0.1ppt/+0.3ppt to 2.17% 0.3ppt/+0.2ppt/-0.1ppt/+0.3ppt 6.09% debacle 1.04% / 3.18%, and the company further increased its investment in R & D. Affected by the decline in gross profit margin, the company's 1H22 net profit margin fell 1.7ppt to 5.03% compared with the same period last year.
Be optimistic about the broad development space of the company's aluminum-plastic film business, and pay attention to the recovery of packaging business in the short term. 1) Aluminum-plastic film: the aluminum-plastic film industry maintains rapid growth with the rapid development of downstream lithium batteries and the improvement of soft package battery permeability. we estimate that the industry sales volume of CAGR 2021-2025 will reach 26.8%. Zijiang technology research and development advantages, product performance industry leader, has reached good cooperation with BYD, CATL and other head lithium battery manufacturers, the company's capacity expansion Maanshan project has been trial production in the middle of this year, Zizhu project construction in an orderly manner, we expect that with the company's rapid capacity expansion and customer expansion, the company's aluminum film business is expected to continue to expand rapidly. 2) Packaging business: the domestic epidemic affected the company's packaging business demand in the second quarter, and the high prices of raw materials affected the company's packaging business profits. we believe that with the improvement of the domestic epidemic and the decline of raw material prices, the company's packaging business income and profitability are expected to improve significantly in the second half of the year.
Profit forecast and valuation
The current share price corresponds to the price / earnings ratio of 18 times / 12 times earnings for 2022amp in 2023, respectively, leaving the earnings forecast unchanged in 2023. Maintain an outperform industry rating and a target price of 8.24 yuan, corresponding to a price-to-earnings ratio of 24 times / 17 times in 2023, which is 32% higher than the current stock price.
Risk
The price of raw materials has risen sharply; production capacity has climbed less than expected; and the epidemic has repeatedly led to demand fluctuations.