Event: the company released its semi-annual report of 2022, with revenue of 276 million in the first half of the year, + 173% compared with the same period last year, and net profit of 41 million and + 345% respectively. The net profit of Q2 was 28 million, + 358% and + 106% respectively.
The release of production capacity of the Kumgang line has contributed to a substantial increase in revenue & a rise in profitability. 1) capacity release + full orders, the company's Kumgang line shipments increased significantly. In the first half of the year, the company achieved revenue of 276 million, + 173% compared with the same period last year, mainly due to the continuous release of the production capacity of the diamond line during the reporting period, rising from 800000 km / month in January to 1.2 million km / month in June, and the company's orders were full under the superimposed downstream Gaojing gas. as a result, production and sales have increased substantially. 2) profitability increased significantly: the company's gross profit margin rose sharply to 31.8% in the first half of the year, year-on-year + 19.9pct, mainly due to two reasons: first, the economies of scale gradually emerged after the release of production capacity, and the unit cost of product materials decreased; second, the company reduced raw material costs by early price locking with suppliers or by increasing the self-made proportion of core raw materials. In addition, the amortization of company expenses also decreased significantly after the expansion of production and marketing. The expense rate during 22H1 is about 13.1%, year-on-year-21pct, so the final company net interest rate rises to 14.9%, year-on-year + 32.3pct, and profitability increases quarter by quarter, 22Q2 net interest rate is 18.1%, month-on-month + 7.2pct.
With the rapid expansion of production capacity, the volume of tungsten wire and diamond wire can be expected. 1) the rapid expansion of the production capacity of the diamond line: the technical level of the company's production line equipment continues to improve significantly, the new production equipment 15-line model was officially put into use in the first half of the year, and the single-line 20-line model has been successfully verified. As of June 2022, the company's production capacity of the diamond line is 1.2 million km / month, and it is planned to increase the production capacity to 3 million km / month this year (and the existing plant still has the ability to increase the capacity by 2 million km / month). It is expected that under the high prosperity of the photovoltaic industry in the future, the demand for the Kumgang line is expected to continue to grow, and the company's market share may continue to increase. 2) following the trend of thinning, the future tungsten wire is expected to increase: at present, the company's 40 μ m / 38 μ m / 36 μ m products account for about 20% of the company's 40 μ m / 38 μ m / 36 μ m products, and 35 μ m has a certain scale supply. at the same time, the company's tungsten wire products have been produced on a large scale, and the permeability is expected to increase with the increase of tungsten wire supply and the decrease of cost in the future.
Profit forecast and investment advice: the company is expected to return to the parent net profit of 1.1,2.4 and 350 million in 2024, taking into account the high prosperity of the downstream photovoltaic industry, the company's Kumgang line production capacity is expanding rapidly, covering and giving "overweight" rating for the first time.
Risk hint: the lower-than-expected risk of downstream demand, the risk of policy change and the slow progress of project production.