Event

Wanshun Xincai issued an announcement: the total operating income in the first half of 2022 was 2.782 billion yuan,-2.8% compared with the same period last year; the net profit was 121 million yuan, an increase of 562.65% over the same period last year; and the net profit after deducting non-recurrent profits and losses was 116 million yuan, an increase of 725.81% over the same period last year.

Main points of investment

Aluminum processing business led to substantial growth in performance

The company's Q1 revenue is 1.337 billion yuan, year-on-year-5.1%, month-on-month ratio-1.97% TAC Q2 revenue 1.445 billion yuan, year-on-year-0.6%, month-on-month + 8.06%. The net profit of Q1 is 54 million yuan, + 663.0%, + 181.65%, + 181.65%, + 498.7%, + 23.20%, respectively.

The substantial increase in net profit is mainly due to the strong demand downstream of the aluminum processing business and the annual production capacity of 40,000 tons of aluminum foil in the first phase of Anhui Zhongji of the company.

The company focuses on three major businesses, and the aluminum foil business is growing rapidly.

The company is mainly engaged in aluminum processing, paper packaging materials and functional film production and sales. Aluminum processing business mainly produces aluminum foil and aluminum strip, the products are mainly used in batteries, capacitors and other electronic components, as well as food and beverages and other daily necessities and construction fields. Paper packaging materials business mainly produces transfer paper, composite paper, used in tobacco labels, wine labels and other packaging fields. Functional thin film business products are widely used downstream, including liquid crystal display, touch screen, architecture, car film and solar cell packaging.

As of the reporting period, the company has a production capacity of 123000 tons of aluminum foil, 110000 tons of matching aluminum strip, 80,000 tons of paper packaging materials, 16.8 million square meters of functional film and 1200 tons of high resistance diaphragm for food and pharmaceutical packaging.

The rapid growth of aluminum foil business is due to the expansion of production capacity. In the first half of the year, the revenue of the aluminum processing business was 1.786 billion yuan, an increase of 19.66% over the same period last year, and the contribution gross profit was 327 million yuan, an increase of 117.7% over the same period last year. The revenue of the aluminum processing industry accounts for 64.2% of the total revenue, while the gross profit accounts for 88.24% of the total gross profit. In December 2021, the first phase of Anhui Zhongji aluminum foil project was put into production, with sales of 12500 tons in the first half of the year; Jiangsu Zhongji realized aluminum foil sales of 36600 tons.

Step up the construction of new aluminum foil production capacity, is expected to fully absorb new energy dividends in addition to the production capacity of 123000 tons of aluminum foil, the company is stepping up the construction of Anhui Zhongji Phase II 32000 tons of aluminum foil production capacity. In addition, a project with an annual production capacity of 100000 tons of power and energy storage battery foil is being built in Zhongji, Anhui Province. after the project is completed, it will have a total capacity of 255000 tons of aluminum foil by 2024.

Other related production capacity includes that the 130000 tons of aluminum strip capacity under construction in Sichuan Wanshun Zhongji has also entered the stage of equipment installation and is scheduled to be put into production in 2023. In addition, the company acquired Shenzhen Yuqiang Sun Company, cut into the carbon foil industry, is currently producing 3700 tons of carbon foil production capacity, is preparing to build 50, 000 tons of carbon foil new production capacity.

The finished product rate of battery aluminum foil produced by the company is more than 78%, which is at a good level in the industry and has strong competitiveness. Downstream, the company's aluminum foil products are widely used in new energy vehicle lithium battery products and energy storage battery products, the current downstream track is in a boom period, the company, as a supplier, is expected to continue to benefit.

Profit forecast

It is predicted that the return net profit of the company from 2022 to 2024 is 2.60,3.53 and 455 million yuan respectively, and the EPS is 0.38,0.52,0.67 yuan respectively. The current stock price corresponding to PE is 29.3,21.6 and 16.7 times respectively.

Risk hint

1) the downstream demand is lower than expected; 2) the progress of capacity construction is not as expected; 3) the epidemic affects the start of construction.