Income is stable, deducting non-profit to resume growth. According to the company's semi-annual report, the company's operating income in the first half of 2019 was 710 million yuan, down 0.17% from the same period last year; the net profit belonging to shareholders of listed companies was 32.1623 million yuan, down 11.39% from the same period last year; the deduction of non-net profit belonging to shareholders of listed companies was 37.9323 million yuan, an increase of 21.39% over the same period last year; and the net cash flow from operating activities was 63.1344 million yuan, an increase of 77.34% over the same period last year.
We will improve the industrial layout and continuously optimize production capacity. The company adheres to the "vertical integration" industry chain development strategy, forming a relatively complete product line from electrolytic copper foil, CCL to PCB. According to the company's semi-annual report, copper foil, copper-clad laminate and printed circuit boards are the main sources of business income. Of this total, copper foil revenue was 280 million, accounting for 40.6 per cent. The revenue of copper clad laminate is 210 million, accounting for 30.2%. The revenue of printed circuit board is 190 million, accounting for 28%. The company's comprehensive gross profit margin was 21.5% in the first half of 2019, up 4.9% from the same period last year. Among them, copper foil, copper clad laminate and gross profit margin are 29.7%, 18.2% and 8.9% respectively, and copper foil contributes a high proportion of gross profit. According to the 2018 annual report, the company currently has a production capacity of 12000 tons of copper foil, and the company is accelerating the equipment installation and commissioning of the "annual production of 8000 tons of high-precision electronic copper foil project (Phase II)", which is expected to be put into production in 2019. The total copper foil production capacity of the company will exceed 20,000 tons. In addition, the company plans to build an electronic information industry base in Meizhou Keng, Baidu Town, Meixian District, which will increase the annual production capacity of 20, 000 tons of high-precision electronic copper foil and 20 million high-frequency and high-speed copper clad laminates. At present, the company has an annual production capacity of 12 million pieces of copper clad laminates, and will reach a production capacity of 32 million pieces of copper clad laminates after it is put into production.
Join with colleges and universities to actively research and develop to consolidate the technological foundation. The company jointly developed "nanometer paper-based high-frequency and high-speed substrate technology" with South China University of Technology and Harbin University of Technology, and made a breakthrough in the field of high-frequency and high-speed copper clad laminate; signed a cooperation agreement with Shanghai Jiaotong University to jointly build a joint research center for electronic materials, committed to high-frequency and high-speed (5-10G) copper foil and substrate material key process technology, lithium copper foil key process technology and other research.
Investment suggestion: we expect the company's income from 2019 to 2021 to be 1.64 billion yuan, 2.07 billion yuan and 2.51 billion yuan respectively.
Risk tips: capacity expansion is not as expected, the progress of new product development is not as expected, and the copper foil / CCL market fluctuates.