Event description. On August 22, 2022, the company released a semi-annual report. In 22 years, H1 Company achieved revenue of 2.053 billion yuan, + 2.25% compared with the same period last year; realized net profit of 203 million yuan, + 0.81%; and deducted non-return net profit of 180 million yuan,-4.87% of the same period last year. The overall performance is in line with our expectations.
The performance in the second quarter is under pressure, and the ability to control fees has improved. Affected by the epidemic, the company's production base in Kunshan and Changchun, Jiangsu Province is in a state of shutdown, the impact and losses are large, and now it has been in normal operation. Q2 quarter copper foil business volume + price decline, resulting in Q2 performance decline. Revenue and net profit: the company's 2022Q2 revenue is 941 million yuan, year-on-year-15.84%, month-on-month-15.35%; return-to-mother net profit is 76 million yuan, year-on-year-44.00%, month-on-month ratio-39.94%; deduction of non-return net profit is 70 million yuan,-45.34% year-on-year, month-on-month 36.14%. Gross profit margin: 2022Q2 gross profit margin is 23.12%, year-on-year-3.22pcts, month-on-month-0.73pct. Net interest rate:
2022Q2 net interest rate is 8.10%, year-on-year-4.07pcts, month-on-month-3.32pcts. Expense rate: the expense rate during the 2022Q2 period of the company is 13.25%, compared with the same period of 0.44pct, in which the rates of sales, management, R & D and financial expenses are 0.78%, 3.48%, 5.29% and 3.70%, respectively, with year-on-year changes-0.11pct,-0.55pct, 1.68pcts and-0.58pct. Among them, affected by the optimization of capital structure, the improvement of financial expenses is the most obvious.
Copper foil business volume + price end short-term pressure, the future improvement trend is clear. 1) quantity: affected by the epidemic, overseas customer demand was lower than expected. H1 shipments in 22 years were 17500 tons (9000 tons in the first quarter + 8500 tons in the second quarter). With the production capacity of Huangshi base and Huizhou base landing, we expect Q3 shipments to reach 12000 tons. Annual shipments can reach 45000 tons, 23-year shipments can reach 80,000 tons. 2) Price: the processing fee of Q2 copper foil is about 10,000 yuan lower than that of Q1 (including tax). Among them, the processing fee for 6 microns in Q2 quarter is about 40,000 yuan, and that for 8 microns is about 35000 yuan. The company adopts the strategy of volume premium for profit, and the processing fee remains stable.
Projects under construction are progressing smoothly and comprehensive production capacity is steadily expanding. By the end of the H1 reporting period in 2022, the total production capacity of Qinghai Copper foil Base and Huizhou Copper foil Base is 43,000 tons / year, 27,000 tons / year in construction, and the total production capacity is expected to reach 70,000 tons / year. Among them, in the construction of production capacity have been mass trial production. According to the H1 announcement in 2022, the company has invested in the construction of "100000 tons of copper foil material Hubei Huangshi new production base project" and "Guixi city annual production capacity of 100000 tons ultra-thin lithium electric copper foil production base project". Of these, the Hubei Huangshi Project is built in two phases with 100000 tons in the first phase, which is expected to be put into production in June 2023; the Jiangxi Guixi Project is built in two phases with 100000 tons in two phases, with 50,000 tons in the first phase, which is expected to be put into production in 2023 and 30,000 tons in 2024; the second phase will begin construction in 2025. In the future, with the rapid release of production capacity, the company's performance is expected to achieve high growth.
Investment suggestion: we expect the company to achieve revenue of 51.27,85.77 and 11.394 billion yuan from 2022 to 2024, with year-on-year growth rates of 15.3%, 67.3% and 32.8%, and net profit of 6.58,11.75 and 1.622 billion yuan, with increases of 62.3%, 78.6% and 38.1%. The current price corresponds to 28, 16 and 11 times PE for 22-24 years. Benefit from the rapid expansion of the demand for high-end copper foil products in the lithium copper foil industry. Taking into account the company as one of the leaders in the copper foil industry, steady release of production capacity and rich customer resources and other advantages, maintain the "recommended" rating.
Risk hints: industry competition aggravates risk; raw material price fluctuation risk; production rhythm is less than expected risk; exchange rate fluctuation risk.