The net profit of 22Q1-3 increased by 11.03% compared with the same period last year, maintaining the "buy" rating company 22Q1-3 with a revenue of 3.281 billion yuan (yoy+65.11%) and a net profit of 438 million yuan (yoy+11.03%); 22Q3 had a quarterly revenue of 1.347 billion yuan (yoy+72.28%, qoq+38.66%) and a net profit of 150 million yuan (yoy-0.21%, qoq+31.30%). Taking into account the decline in the prosperity of the copper processing industry, we adjust the copper foil sales and processing fee assumptions of the company. It is estimated that the return net profit of the company in 22-24 is 61512.65pm 1.722 billion yuan (the previous value is 9.46pm 19.65pm 3.331 billion yuan), and the average PE (2023E) of the comparable company is 132x. Considering that the company is a head enterprise and the production capacity is released quickly, give the company a valuation of 15.1 times PE in 23 years, with an EPS of 4.16RMB. Corresponding to the target price of 62.91 yuan (the previous value of 101.74 yuan), maintain the "buy" rating.

Copper foil processing fees decline and manufacturing costs rise, 22Q3 copper foil sales gross margin fell 6.88pct according to the company's three-quarter report, the company 22Q1-3 copper foil products sales gross margin of 23.61% (yoy-6.88pct), corresponding to the net sales margin of 13.33% (yoy-6.52pct), of which 22Q3 gross profit margin was 18.02% (yoy-11.13pct, qoq-6.88pct) The corresponding net interest rate is 11.10% (yoy-8.08pct, qoq-0.61pct), mainly due to the continued decline in processing fees and the increase in manufacturing costs. In terms of expenses, the company's expense rate during 22Q1-3 was 7.84% (yoy-0.41pct), of which the cost rate during 22Q3 decreased significantly from 5.6pct to 4.89%, mainly due to a sharp drop in R & D expenditure.

The company grasps both lithium electricity and electronic copper foil, and its production capacity is expanded clearly and rapidly. the company's business is mainly lithium copper foil, while laying out high-end electronic circuit copper foil. The company's capacity expansion is clear and rapid. According to the existing production capacity and investment projects, we expect the company to achieve a production capacity of 4.60, 16.70 and 21.70 million tons in 22-25 years, of which 20,000 tons of projects under construction in Jiangxi are mainly copper foil for high-end electronic circuits; the 100000-ton lithium electricity copper foil production capacity project under construction with Ningde Times has started construction at the end of June 22. In addition, the company issued a fixed increase in September 22, providing financial guarantee for the smooth construction of new production capacity.

The company works closely with lithium battery head enterprises, and technology leads the market. According to the reply report of the examination and inquiry letter on issuing stock application documents to specific targets (second revised version) in June 22, the top five customers of 22Q1 include Ningde Times, Ningde New Energy, China New Airlines, BYD and Xingheng Power, accounting for more than 90% of the company's revenue, of which Ningde accounts for more than 60%. The company has cooperated with Ningde Times for more than 10 years, and jointly invested and built 100000 tons of lithium copper foil production capacity; the company's lithium copper foil technology is in a leading position in the market and has become the main domestic supplier of 6 μ m and 4.5 μ m extremely thin lithium copper foil. 4.5 μ m extremely thin lithium copper foil has been supplied to Ningde Times and other customers in small batches; and has carried out the corresponding technical reserve work for products below 4.5 μ m.

Risk tips: sharp fluctuations in raw material prices lead to impairment losses, new projects are put into production lower than expected, and downstream demand is lower than expected.