Incident: The company released its 2022 semi-annual report. It achieved operating income of 519 million yuan in the first half of the year, an increase of 3.41% over the previous year; achieved net profit of 40 million yuan, an increase of 43.43% over the previous year; and realized net profit of Fumo was 36 million yuan, an increase of 43.03% over the previous year.
The company is operating steadily and its profitability has been greatly improved. In the second quarter of 2022, the company achieved operating income of 270 million yuan, an increase of 6.43% over the previous year and an increase of 8.15% over the previous quarter. The revenue level reached a quarterly high. The company operates steadily, continuously optimizes product structure, continuously strengthens cost and expense control, and effectively improves product profitability. The consolidated gross profit margin for the second quarter was 25.00%, up 5.97 pct from the previous year, and continued to increase 0.08 pct from month to month. The company calculated a loss of 13.62 million yuan from the price drop of capacitor products and connector products. Affected by this, the net profit returned to the mother in the second quarter was 19 million yuan. There was a slight decline over the previous month, but the year-on-year increase was still a sharp increase of 73.62%. The company is developing well. Excluding inventory impairment factors, revenue, gross profit margin, and net profit levels are the best in a single quarter.
BOPP capacitor films continue to be booming, and production expansion is progressing smoothly. Benefiting from strong growth in emerging markets such as new energy vehicles, photovoltaics, and wind power, BOPP capacitor films are in short supply, and product prices have been rising for two consecutive quarters since this year. The electronic grade film materials business achieved revenue of 239 million yuan, an increase of 14.71% over the previous year; the gross profit margin was 36.69%, an increase of 11.87 pp over the previous year. The main equipment for the first production line of the ultra-thin film materials project invested by the company for new energy is expected to be delivered by the end of 2022, and is expected to see a sharp rise in volume and price after production is put into operation next year. The main equipment for the second production line of the project has also been signed.
The capacitor business is affected by weak demand for home appliances and the epidemic, and the revenue structure and profits are expected to improve after the new project is put into operation. The capacitor business achieved revenue of 200 million yuan, a year-on-year decrease of 2.08%; gross profit margin was 18.56%, a year-on-year decrease of 1.79 pp. The downstream of the company's capacitor products is dominated by the home appliance industry. Revenue and gross margin levels declined slightly due to weakening downstream demand and poor logistics and supply chain disruptions caused by the epidemic. The NEV capacitor project was constructed by Fengcheng Electronics, a holding subsidiary. Plant renovation and equipment installation are ongoing. The construction of the first phase of the new energy capacitor expansion project has been completed, and the second phase of plant renovation and equipment ordering is in progress. The main equipment for the first phase of the DC grid transmission capacitor project is being selected and ordered, and the plant is being designed and renovated. As new projects are gradually put into operation and contribute revenue, the revenue structure and profitability of the capacitor business will improve significantly.
Profit forecasts and investment recommendations. The company's net profit from 2022 to 2024 is expected to be 106 million, 178 million, and 238 million respectively. BOPP capacitor films continue to thrive, and production prices for new production lines will rise sharply next year. In the medium to long term, thin film capacitors will be fully transformed into the fields of new energy vehicles, wind power, and photovoltaics, and revenue and profitability are expected to improve significantly. Maintain a “buy” rating.
Risk warning: film price increases fall short of expectations; raw material prices rise; production progress of new projects is lagging behind; customer expansion falls short of expectations.