Incidents:
On April 24, 2023, the company released its 2022 annual report. During the reporting period, the company achieved revenue of 4.709 billion yuan, +5.93% year on year, achieved net profit of 352 million yuan, -13.04% year on year, achieved net profit of 332 million yuan after deduction of non-return mother's net profit of 332 million yuan, or -11.53% year on year, achieving basic earnings of 0.21 yuan/share per share.
Copper foil sales increased rapidly, and the decline in processing fees affected profitability. The company achieved copper foil sales of 42,300 tons in 2022, +20.60% year on year, and achieved revenue from the copper foil business of 4.287 billion yuan, -4.91% year on year. According to our estimates, the company's revenue per ton of copper foil business in 2022 was 101,400 yuan/ton, -13.01% year on year, gross profit per ton was 19,900 yuan/ton, -30.58% year on year. The main reason is that overall processing costs in the copper foil industry have continued to decline since 22Q2, and the profitability of copper foil products is under pressure.
Continue to develop high value-added products, and the product structure is expected to be optimized
At present, while continuing to release 6 μm copper foils, the company continues to promote batch sales of 4.5 μm and 4 μm copper foils. Compared with traditional lithium battery copper foil, composite copper foil has advantages such as high safety and low cost, but it is still in the early stages of industrialization. The company is actively developing composite copper foil products, and samples have now been sent to downstream customers. By increasing the proportion of sales of high-value-added products, the company's overall product structure is expected to be optimized.
Invest in Dawson shares to lay out upstream lithium battery equipment
On July 8, 2022, the company announced that its wholly-owned subsidiary Tibet Nord plans to acquire 5% of Dawson's shares, a leading domestic company in the lithium battery copper foil equipment field. Dawson Co., Ltd. has achieved domestic replacement of high-precision electrolytic copper foil equipment, breaking the monopoly of foreign companies in the field of high-end electrolytic copper foil. Through its layout in the upstream equipment field, the company is expected to join hands with Dawson Co., Ltd. to accelerate the expansion of the high-end electrolytic copper foil market.
Profit Forecasts, Valuations, and Ratings
Industry processing fees have declined markedly. We expect the company's revenue to be 6692/82.38/9.573 billion yuan in 2023-2025 (the original 23/24 forecast was 9505/12.765 billion yuan respectively), up 42.10%/23.10%/16.21%, respectively; Guimu's net profit was 6.50/896/1,074 billion yuan (the original forecast for 23/24 was 1,246/1,685 billion yuan respectively), up 84.53%/37.86%/19.83%, respectively; corresponding The EPS was 0.37/0.51/0.61 yuan/share, and the corresponding PE was 19.6/14.2/11.9 times respectively. Combining the relative valuation and absolute valuation results, we gave the company 25 times PE for 23 years, with a corresponding target price of 9.25 yuan, maintaining the “buy” rating.
Risk warning: downstream demand falls short of expectations, product structure transformation falls short of expectations, industry competition intensifies