Event: Dongfeng Co., Ltd. released its 2022 semi-annual report. 2022H1 achieved an operating income of 1.966 billion yuan, an increase of 5.59% over the same period last year, a net profit of 241 million yuan, a decrease of 48.60%, and a net profit of 234 million yuan, down 49.23%. Among them, the operating income of 2022Q2 in the current quarter was 919 million yuan, up 3.19% from the same period last year; the net profit was 120 million yuan, down 46.28% from the same period last year; and the net profit after deducting non-return was 117 million yuan, down 46.28% from the same period last year.
The revenue of the main business of tobacco label has increased steadily, and the strategic layout of the new business has accelerated the strategic transformation of 22H1 to continuously promote the strategic transformation of "increasing cigarette label, expanding drug bags and adding competition", consolidate the development of the main packaging industry, and continue to increase investment in class I pharmaceutical packaging and new materials. The multi-point spread of the 22H1 epidemic had a certain impact on the transportation and logistics of the company's factories. 22H1 achieved revenue of 1.966 billion yuan, an increase of 5.59% over the same period last year, of which 22Q2 achieved revenue of 919 million yuan, an increase of 3.19% over the same period last year.
From a product point of view, 22H1's main business revenue of tobacco label / pharmaceutical packaging / new materials was 1347 million yuan, respectively, which was 7.21% / basically the same as the same period last year, accounting for 68.53%, 14.14% and 6.99%, respectively. 1) in terms of the main packaging industry, 22H1 won a total of 18 tobacco label projects, seizing the rising trend of innovative products such as high-end upgrading and "thin, medium and short burst" in the downstream tobacco product structure, and 22H1 tobacco label revenue achieved steady growth. 2) in terms of pharmaceutical packaging business, 22H1 achieved steady growth in medical bag income, the company increased investment around Class I pharmaceutical packaging materials industry, Jiangsu Taixing 120 million yuan pharmaceutical packaging hard film production project progressed smoothly, and in June 2022 the company considered and approved the proposed investment of 500 million yuan to build an intelligent manufacturing base for high barrier pharmaceutical packaging materials in Changzhou, Jiangsu Province, which will further optimize the layout of Class I pharmaceutical packaging materials. 3) in terms of new materials, 22H1 accelerated its entry into the field of new energy lithium electricity and energy storage materials, and by investing in Bosheng new materials involved in power batteries and energy storage diaphragm products, the revenue of 22H1 new materials was basically the same as the same period of the same period in the industry. In other subdivisions of new materials, in July 2022, the company considered and approved a project to invest no more than 130 million yuan to build new functional membrane materials to form a core product system based on recyclable high barrier materials.
During the period, the cost is well controlled, and the net interest rate is dragged down by the investment income.
In terms of profitability, 22H1's gross profit margin is 31.75%, down 1.82pct from the same period last year, which is expected to be mainly due to the adjustment of business structure; 22Q2 gross profit margin is 31.28%, down 1.99pct from the same period last year.
The cost control of the company is good. The expense rate of 22H1 during the period is 14.75%, which is 1.99pct lower than the same period last year. The sales / management / R & D / financial expense rate is 3.81%, 6.95%, 4.43%, 0.44%, respectively,-0.67pct/-0.97pct/+0.26pct/-0.62pct. The company's 22H1 net interest rate was 12.51%, down 12.53% from the same period last year. The company's net interest rate at 22Q2 was 13.28%, down 11.63pct from the same period last year.
The company's 22H1 net interest rate is under short-term pressure, mainly due to a sharp drop in the market value of Naixue, a listed company in the investment project of the company's consumer investment fund, and a sharp drop in valuations such as three-and-a-half coffee and Hua Zhi, and the company's 22H1 investment income fell 116.63% to-48 million yuan compared with the same period last year.
Investment suggestion: the steady development of the company's tobacco label business, accelerating the transformation to high value-added subdivision track Class I medical packaging materials and high prosperity track new materials, long-term development is expected. We estimate that Dongfeng's operating income from 2022 to 2024 will be 41.27,47.36 and 5.254 billion yuan, up 8.47%, 14.75% and 10.94% over the same period last year, and the net profit will be 6.51,7.49 and 878 million yuan respectively, up-17.08%, 15.05% and 17.22% over the same period last year, corresponding to PE 12.5x, 10.8x and 9.2x.
Risk hints: the risk of large fluctuations in raw material prices; the risk of lower-than-expected growth of new business, the risk of HNB policy supervision exceeding expectations, the risk of repeated epidemic, the risk of capacity construction falling short of expectations, and so on.