1H22 performance is lower than we expected.
The company announced 1H22 results: revenue 1.966 billion yuan, year-on-year + 5.6%; return net profit 241 million yuan, year-on-year-48.6%; deduction of non-return net profit 234 million yuan,-49.2% year-on-year. The investment income decreased significantly compared with the same period last year, and the performance was lower than we expected.
From a quarterly point of view, Q1/Q2 achieved income of 1.047 million yuan, + 7.8% and 3.2% respectively, and net profit of 1.21 billion yuan and 120 million yuan, respectively,-50.7% and 46.3%, respectively.
Trend of development
Revenue continued to grow steadily. The company's 1H22 revenue increased by 5.6% year-on-year, according to business: 1) cigarette label: the revenue of 1H22's tobacco label business was 1.347 billion yuan, an increase of 9.65% over the same period last year, with sales of 1.7579 million cases, an increase of 6.03% over the same period last year, continuing the growth trend. 2) bag: the income of 1H22's bag is 278 million yuan, which is + 7.2% compared with the same period last year. During the reporting period, cooperation with step Pharmaceutical, AstraZeneca PLC, etc., progressed smoothly, and the customer structure continued to be optimized. 3) New materials: the income of new materials of 1H22 Company is 137 million yuan, which achieves stable development in the case of periodic fluctuations in industry demand caused by the epidemic.
The decline in investment income leads to a decline in profitability. 1H22's gross profit margin decreased by 1.8ppt to 31.75% compared with the same period last year. We judged that the company's capacity utilization was mainly affected by the adjustment of the company's business structure and the epidemic.
In terms of period expenses, the period expense rate of 1H22 decreased by 2.0ppt to 14.75% compared with the same period last year, of which the sales / management / finance / R & D expense rate changed from 3.81% to 3.81% to 6.95% 0.44% 4.43%. 1H22's investment income fell 117% to-48 million yuan compared with the same period last year, mainly due to the decline in the income of the company's consumer investment funds, resulting in a decline in 1H22 net interest rate to 12.27% year-on-year; excluding the impact of investment income, 1H22 home net interest rate increased 5.2ppt compared with the same period last year.
Be optimistic about the broad development space of the company's new materials and medicine bag business, and pay attention to the change of investment income in the short term. 1) New materials: the company has been ploughing the new materials industry for many years, constantly expanding its downstream applications to the fields of food packaging, new energy, building energy saving and so on. We believe that with the continuous development of new categories and new customers, the company's new materials business still has a lot of room for development. 2) Pharmaceutical bags: the company actively distributes the business of pharmaceutical bags by means of epitaxy and M & A. in the field of class I drug packaging materials, the company has achieved the coverage of many kinds of pharmaceutical packaging materials, such as PVC hard film, PVDC hard film, prickly aluminum cap, aluminum-plastic composite lid, medicinal SP composite film, pharmaceutical packaging aluminum foil, forming and stamping composite hard tablets, etc., and has accumulated many well-known pharmaceutical customers, such as Sinopec, Broad Biology, Sinopharm Group and so on. Short-term advice to pay attention to the company's investment income.
Profit forecast and valuation
Considering the business income of the company's consumer investment fund and gradually entering the withdrawal period, the net profit of 2022max 2023 was reduced by 36.0% to 524,679 million yuan respectively, corresponding to an EPS of 0.28pm 0.37 yuan, and the current stock price corresponds to a price-to-earnings ratio of 16x12 times 2023 respectively. Maintain an industry rating that outperforms. Based on the adjustment of earnings forecasts and taking into account the impact of policy tightening in the new tobacco industry, the target price will be lowered by 40% to 6.00 yuan, corresponding to a price-to-earnings ratio of 21pm in 2023, which is 32% higher than the current stock price.
Risk.
Raw material prices fluctuate sharply; industry policy changes; new business expansion falls short of expectations.