The company is one of the earliest enterprises engaged in the development of new aluminum electronic materials in China, and has the largest production base of high purity aluminum in the world. After more than 50 years of development, it has become the core backbone of China's strategic new material industry. The main products include: high purity aluminum, electronic aluminum foil and electrode foil and other electronic components raw materials. The company currently produces 180000 tons of high-purity aluminum (hereinafter referred to as "primary high-purity aluminum"), 50, 000 tons of high-purity aluminum, 35000 tons of electronic aluminum foil and 2000 million square meters of electrode foil. The company's fund-raising projects: annual output of 15 million square meters of high-pressure high-performance corrosion foil project, annual output of 15 million square meters of high-pressure high-performance foil project. By the end of December 2019, some production lines have entered the stage of commissioning and production.
The import substitution space of high purity metal is huge, and the company is the only enterprise in China that has the production capacity of 5N (99.999%) and above ultra-high purity aluminum and high purification smelting and casting. The sputtering target industry chain shows a pyramid distribution, high technical threshold and large equipment investment in the manufacturing process of high purity metal supply and high purity sputtering target, which is mainly monopolized by American and Japanese enterprises. Norway Hydro is currently the largest company in the 5N5 high purity aluminum industry in the world. In contrast, Xinjiang Zhonghe entered the high purity aluminum target relatively late, and the technology gap is gradually narrowing. The purification methods of high purity aluminum mainly include three-layer electrolysis and segregation, which are all mastered and adopted by Zhonghe in Xinjiang at present. The company's ultra-high purity aluminum sputtering target substrate and aluminum-based bonding wire busbar after ten years of research and development (national major science and technology special project 02), began to supply the market one after another in 2018, and the products gradually achieved stability and batch supply in 2019. At present, the target materials supplied by the company account for about 60% of the target materials for semiconductors and about 40% for display panels. The sales volume of ultra-high purity aluminum sputtering target substrate in 2018 and 2019 is 31.70t and 24.39t respectively, and the operating income is 2.6555 million yuan and 3.8207 million yuan respectively.
Profit forecast and investment suggestion: it is estimated that the return net profit of the company from 2020 to 2022 is 1.22,1.32 and 173 million yuan respectively, and the EPS is 0.12,0.13,0.17 yuan respectively. On March 27, 2020, the stock price corresponding to PSynp E is 36.74X, 34.07X and 25.90X, respectively.
Risk hint: the prices of alumina and electrolytic aluminum fluctuate sharply, and domestic substitutes are not as expected.