Main points of investment
Event: the company issued a semi-annual performance announcement for 2022, with revenue of 38.04 billion yuan in the first half of 2022, + 14.9% year-on-year, and net profit of 650 million yuan, + 4.7% compared with the same period last year. Q2 achieved revenue of 19.5 billion yuan in a single quarter, with year-on-year / month-on-month + 11.2% ash 5.1%, net profit of 340 million yuan, and year-on-year / month-3.3% quarter-on-month net profit of 8.6%.
Traditional business: profitability continues to improve, against the trend to maintain positive growth. 2022H1 copper processing products sales performance is slightly weak, but with the continued improvement in profitability, the overall performance of the industry maintained positive growth against the trend. (1) sales volume: 2022H1 sales volume was 460400 tons,-3.2% compared with the same period last year. Although Q2 sales increased month on quarter, it was still affected by the domestic epidemic situation and the macro environment at home and abroad in the first half of the year. (2) profit: 2022H1's main gross profit per ton is about 3530 yuan (about + 800yuan compared with the same period last year), and its profitability has increased significantly: (a) overseas market: in terms of sales volume, the company has seized the market opportunity to cover more than 60% of the overseas market to achieve increment, including a substantial year-on-year increase in sales in some high-value markets; in terms of profitability, overseas ton processing fees increased significantly in the first half of the year, with overseas income + 26.1% and gross profit margin + 1.95pct.
(B) domestic market: in terms of sales volume, it is due to the impact of the epidemic and the company's proactive strategic adjustment; but the substantial increase in profitability is more worthy of attention: first, the overall ton gross profit level is improved by optimizing the product and customer structure; second, the signs of clear supply in the industry are emerging, and the company's premium capacity may be enhanced. (C) Exchange gains: benefiting from the strong US dollar in the first half of the year, the company's export business income accounted for more than 30%, and the exchange gain of 210 million yuan was brought about by the depreciation of RMB. Due to the implementation of exchange rate hedging, the net profit per ton can more directly reflect the actual profitability, with a net profit of 1414 yuan per ton in the first half of the year, which is + 106yuan compared with the same period last year.
New energy business: lithium copper foil is accelerated, and Q3 is expected to achieve a capacity of 10,000 tons. In June 2022, the company's copper foil project exceeded expectations and achieved trial production. at present, the company has the capacity of 4.5tick / 8 μ m lithium copper foil production, and is sending samples to downstream customers one after another, and has obtained some orders. We expect the copper foil project to achieve a production capacity of 12500 tons in September and 25000 tons by the end of this year, with annual sales or contribution to a kiloton scale. We expect to increase the sales of lithium copper foil by 20,000 tons in 2023 and 2024, which is expected to significantly increase the performance and open the company's second growth curve.
Profit forecast and investment suggestions: while the company continues to reduce costs and increase efficiency by virtue of the new production line, the optimization of business structure helps to improve the profitability of traditional business, and the lithium copper foil project opens the second growth curve for a long time; in addition, the supply clearance of the copper tube industry is expected to accelerate and attach importance to the company's α + β investment opportunities. We estimate that the company's net profit from 2022 to 2024 will be 1.2884 billion yuan for 12.99pm 20.90pm, 1.47 yuan for EPS and 8.0 times for PE at the closing price on August 29, maintaining the "prudent overweight" rating.
Risk hints: global macroeconomic fluctuations increase risks; downstream demand slows; projects under construction are less than expected.