Key points of investment
Incidents: The company achieved revenue of 3.714 billion yuan in 2022, an increase of 25.71% over the previous year; net profit of Guimu was 292 million yuan, an increase of 28.29% over the previous year; after deducting net profit of non-Gimo, an increase of 39.40% over the previous year. The revenue for the single quarter of 2022/Q4 was 830 million yuan, up 18.94% year on year, down 15.59% month on month; Guimu's net profit was 31 million yuan, up 224.85% year on year. 2023Q1 achieved revenue of 1,078 million yuan, an increase of 11.78% over the previous year, an increase of 29.77% over the previous year; Guimu's net profit was 120 million yuan, an increase of 35.50% over the previous year.
The three popular tracks go hand in hand, and high-value-added projects continue to break through. Revenue from renewable energy, electronic appliances, and transportation equipment manufacturing and maintenance businesses in 2022 was 21.25, 5.75, and 566 million yuan, respectively, +35.31%, +25.08%, and +14.52%, respectively; gross margins were 21.76%, 32.82%, and 27.22%, respectively, compared to 2021 +1.34 pct, +2.23 pct, and -5.06 pct, respectively. Shipments of the 2023Q1 photovoltaic new energy business reached a record high. PUR, three-proof paint, etc. continued to be sold to automotive electronics and consumer electronics customers, and lithium battery anode adhesives began to be supplied to many customers. The gross margin of 2023Q1 was 26.04%, up 2.89 pct from 2022 Q1 and 1.85 pct from 202Q4. The added value of the product increased significantly; various expenses reached 134 million yuan, an increase of 31.67% over the previous year, mainly due to increases in amortization of wages and employee stock ownership plans, R&D investment, and exchange losses.
Seizing the rapid development of new energy sources and the industry opportunities for high-end rubber import substitution, the company has continuously improved its production capacity layout.
The company currently has an annual production capacity of about 160,000 tons of silicone, an annual production capacity of about 40,000 tons of polyurethane rubber, an annual production capacity of about 10,000 tons of other adhesives, and an annual production capacity of about 80 million square meters of solar cell membrane. The newly invested solar cell backfilm project with an annual output of 36 million square meters, the two-component polyurethane adhesive project for lithium batteries with an annual output of about 10,000 tons, and the lithium battery anode adhesive project with an annual output of about 15,000 tons are expected to be put into operation in the first half of 2023, and the Guangzhou Huitian Communications Electronics New Material Expansion Project with an annual output of about 39,300 tons is expected to be completed and put into operation in July 2023.
Investment advice: The company is a leader in the domestic high-end engineering adhesive industry. In recent years, the company has placed its cards in the three major booming tracks of photovoltaic new energy, lithium battery new energy vehicles, and 5G communication industries. High value-added projects have continuously broken through, achieving rapid switching among industry benchmark customers. We forecast the company's net profit to the mother in 2023-2025 to be 386, 491, 630 million yuan, covering the “increase in holdings” rating for the first time.
Risk warning: risk of new product development falling short of expectations; risk of fluctuations in raw material prices; risk of increased competition in the industry.