The production of copper foil is profound, and the standard foil lithium foil has two-line development. Founded in 2010, the company is a subsidiary of Tongling Nonferrous and listed on the Shenzhen Stock Exchange in January 2022. The company is mainly engaged in standard copper foil and lithium copper foil research and development, manufacturing and sales, 13 years to promote product research and development iteration, in 19 years successfully developed 5G communications RTF copper foil and achieve large-scale production, in the domestic R & D and production of high-frequency and high-speed copper foil enterprises ranked first.

Standard copper foil: rise abruptly based on accumulated strength, leading the domestic replacement of high-end standard foil. The company has a deep accumulation of standard copper foil, cost control, yield level, capacity utilization are in the forefront of the industry. At present, the demand for middle and low-end standard copper foil in the industry remains stable, while the demand for high-end standard foil which can effectively reduce signal transmission loss will maintain medium-and high-speed growth in the future, benefiting from the development of 5G and cloud computing. High-end standard foil technical barriers, currently mainly monopolized by Japanese companies, copper crown copper foil as a domestic leader in achieving high-end standard foil domestic substitution, 5G with RTF copper foil ranked first in domestic enterprises, and take the lead in achieving mass production of HVLP copper foil, HVLP copper foil profit is much higher than standard copper foil and very thin lithium copper foil, as the company HVLP copper foil volume, unit profit is expected to increase.

Lithium copper foil: the product structure is continuously optimized, and the cost side will meet the inflection point. The core customer of the company's lithium copper foil is BYD, and the customer structure is high, but at the same time, it also leads to the problem that the lithium copper foil accounts for a relatively high proportion of 8 μ m and the rate of good products is low in the past. Over the past 22 years, with the iteration of customer products, the proportion of the company's extremely thin copper foil products has continued to rise. at the same time, after the company strengthens equipment transformation and introduces wide domestic cathode rolls, it is expected to reduce depreciation costs and improve yield. Lithium copper foil cost will also usher in an inflection point.

Profit forecast: copper crown copper foil turnover efficiency and production efficiency, good cost control; standard copper foil and lithium copper foil customers are high-quality enterprises in the downstream industry, customer quality, sufficient orders; the company is high-frequency high-speed (HVLP) copper foil domestic alternative leader, with the release of high-end standard foil capacity and lithium copper foil cost improvement, the company's profitability is expected to improve. We estimate that the company's revenue from 2022 to 2024 will be RMB 38.9 pound 47.2 / 6.14 billion yuan, and the net profit of return to the parent will be RMB 4.3m RMB 690 million, and the corresponding EPS will be RMB 0.35max 0.52 pm respectively. Taking into account the high-end standard foil leading the domestic substitution and lithium copper foil cost improvement, given 23-year performance 30xPE, the target price of 15.7 yuan, the first coverage, given a "recommended" rating.

Risk tips: the demand growth of high-frequency and high-speed copper foil is not as expected; the rapid expansion of the industry leads to intensified competition; and the progress of composite copper foil is higher than expected.