Events:
On August 25, 2020, the company announced its results in mid-2020: revenue of 573 million yuan, year-on-year-7.46%; net profit of 91 million yuan,-4.53%; and weighted average return on net assets of 4.54%, down 0.13% from the same period last year.
Comments:
1. The company released its mid-2020 report, and its performance picked up in the second quarter.
The company's 2020H1 realized revenue of 573 million yuan, down 7.46% from the same period last year, 25.73% from the previous month, and realized a net profit of 91 million yuan from the same period last year, down 4.53% from the same period last year and 10.97% from the previous year. The weighted average return on equity of 2020H1 was 4.54%, down 0.13 percentage points from the same period last year. Of this total, 2020Q2 realized revenue of 320 million yuan, down 0.37% from the same period last year, up 26.49% from the previous year, and realized a net profit of 48 million yuan from the same period last year, up 5.53% from the same period last year and 10.27% from the previous year.
The reason for the slight decline in 2020H1 performance compared with the same period last year is mainly due to the global spread of novel coronavirus's epidemic in the first half of 2020, the domestic and foreign economic situation is facing new challenges, and the company's operating performance was affected by logistics and the resumption of work lag in the upstream and downstream industrial chain in the first quarter. In the second quarter, the leaders of the board of directors and management of the company timely adjust their work arrangements, actively respond to the changes of the epidemic situation, ensure the safety of employees, increase market development efforts, adjust marketing strategies, and actively promote cost control. Under the joint efforts of all the staff, the company operates steadily in the first half of the year.
2. the leading position of reflective materials is stable and develops rapidly.
The company continues to improve and enhance the product line planning and layout of reflective materials. 2020H1, the company's personal safety protection materials and products achieve a business income of 102 million yuan and a gross profit margin of 23.14%.
At present, the main core products of vehicle safety protection materials and products are license plate film and semi-finished products. In the second quarter, with the effective control of the domestic epidemic and the gradual introduction of policies by the central and local governments to promote automobile consumption, the company's license plate film and semi-finished products resumed in April, and 2020H1 achieved sales revenue of 125 million, + 17.07% compared with the same period last year. The company mainly focuses on the improvement of license plate film quality and the reform of license plate production process, tamping for the later large-scale hot stamping process reform, and the research and development of resin-based carbon belt for printing model plates; at the same time, participate in the license plate style design and complete the license plate semi-finished product automatic grabbing equipment transformation to cope with the opportunities for the implementation of the new policy in the second half of the year and in the future. In the future, with the gradual implementation of the photo management policy of battery cars and electric bicycles, as well as the promotion and use of new license plates, the sales of license plate film of the company will further increase.
3. The market share of micro-prism reflective film is expected to accelerate in the second half of the year. The main core products of road safety protection materials and products are micro-nano prism reflective film and body sticker. At present, the global market size of microprism film is about 1 billion US dollars, and the domestic market accounts for about 25-3 billion of the market. The main market is monopolized by 3M Company Company of the United States. The company is the first and only company in China to master the production capacity of microprism reflective film. 2020H1 microprism reflective film and products achieved sales revenue of 111 million yuan, which was lower than that of the same period last year. As highways, aisles and urban road signs begin to use microprism reflective films, as well as outbreaks of global industrial chain supply to accelerate domestic substitution, the company is expected to accelerate its market share in the second half of the year.
4. Rapid development of aluminum-plastic film and backlight materials.
The company deepens the market promotion in the field of mid-and high-end batteries, especially in the field of power lithium batteries and the upper reaches of the terminal consumer electronics industry chain, to promote the rapid development of aluminum-plastic film and backlight materials. 2020H1, aluminum plastic film to achieve sales revenue of 22 million yuan, a slight decline compared with the same period last year. In the future, the company will continue to consolidate 3C digital middle and high-end customers, and actively promote the landing of certified customer orders, which is expected to contribute new profit growth points for the company.
5. The promotion of 5G is accelerated, and the market space of electronic functional materials is huge.
With the accelerated promotion of 5G communications, wireless charging, NFC, etc., PC/PMMA composite plate market demand is strong, the company 10 million square meters of optical grade PC/PMMA co-extruded film / sheet production line construction project began trial production at the end of 2019, and the target customers are Tongda Holdings, Intelligent Power, Jinrui New Materials and other well-known domestic mobile phone back cover production companies, which are expected to contribute performance in 2020. In the first half of 2020, the company completed the installation and commissioning of two PC/PMMA composite film production lines, one of which is currently specializing in the production of core raw materials for reflective materials to provide matching for the reflective material industry. At present, the company has realized small batch orders. In addition to meeting the matching use of its own reflective materials, the company's release materials are partly sold to the adhesive and electronic packaging industries, with a sales revenue of 24.98 million in the reporting period, an increase over the same period last year. In the future, the development of 5G will lead to the upgrading of the market demand of intelligent terminal electronic consumption, and the added value of the company's products is expected to continue to increase.
6. The five major production bases are linked together, with production capacity, scale advantage and brand advantage. at present, the company has five major production bases, which are located in Longyou, Zhejiang Yongkang, Changzhou, Jiangsu and Huizhou, Guangdong, and have initially formed an industrial pattern with reflective materials as the main industry, optoelectronic functional film new materials and polymer materials as the extension.
Longyou Daoming is mainly engaged in the production of glass bead reflective film and the processing and production of reflective clothing and reflective products, and has built a provincial reflective material engineering and technology center, which is the largest reflective material production base in China and even in the world. Longyou Daoming has an annual output of 30 million square meters of reflective material production line, an annual output of 10 million pieces of reflective clothing production line, an annual production line of 5 million square meters of reflective products. At present, Daoming New Materials has an annual output of 120 million square meters of release material production line construction project, to meet the needs of their own raw materials while achieving external sales. Daoming photoelectric micro-prism reflective film production capacity of 10 million square meters, annual output of lithium-electric composite aluminum-plastic film 15 million square meters, optical grade PC/PMMA co-extruded film / sheet production capacity of 10 million square meters, is currently the most advanced domestic equipment, process route of the most mature microprism reflective film production base. Warwick New Materials has 2500 million square meters of LCD brightening film, 3 million square meters of composite film, decorative film and 3 million square meters of quantum dot film production line. Huizhou Juntong New Materials Co., Ltd., which is owned by Huawei New Materials, has an annual production capacity of more than 50 million optical diaphragms, which can be cut and sold directly according to customer requirements, which has more service advantages than competitors.
7. Persist in R & D investment and continuous technological innovation
The R & D expenditure of 2020H1 reached 20.9335 million yuan, down 21.13% from the same period last year, accounting for 3.65% of the operating income. In 2019, the company has 143 R & D personnel, accounting for 10.21% of the company's total employees. Through independent research and development, by the end of the reporting period, the company and its subsidiaries have obtained a total of 30 invention patents, 99 utility model patents, 17 design patents and 15 national, provincial and ministerial projects. Relying on Zhejiang reflective material Engineering and Technology Research Center and Zhejiang functional thin Film Research Institute, the company's R & D center has set up a number of internal independent R & D platforms to enhance basic research in the field of new materials, increase R & D investment, further strengthen the accumulation and integration of superior resources in the industry, and focus on accelerating the industrialization of functional thin film products such as quantum dot films, PC/PMMA films and prism high-performance optical films. Giving full play to technological advantages provides a strong guarantee for the continuous promotion of core competitiveness. The company's R & D center has been identified as Zhejiang High-tech Enterprise R & D Center, Zhejiang Provincial Enterprise Technology Center and Zhejiang reflective material Engineering Technology Research Center.
8. Investment suggestions:
The company is expected to return to home net profit of 2.49,3.23 and 374 million yuan in 2022, respectively, corresponding to 23, 18 and 15 times PE, with a "recommended" rating.
9. Risk hint: the risk of project production falling short of expectation, the risk of product price decline, the risk of product demand decline, the risk of factory safety and environmental protection production, the risk of raw material price fluctuation, the risk of exchange rate fluctuation, the risk of sales falling short of expectation, etc.