The company publishes its semi-annual report for 2020. 2020H1 realized operating income of 573 million yuan (- 7.46%), net profit of 91.33 million yuan (- 4.53%), and non-return net profit of 89.79 million yuan (+ 3.78%). Among them, Q2 deducts non-return net profit of 46.86 million yuan per quarter (year-on-year + 11%, month on quarter + 9%). Although all businesses have been affected by the epidemic, the company still achieved performance growth in the first half of the year, and the company's growth is expected to accelerate under many positive factors.
License plate film: against the trend of growth, incremental development space to open. 20H1 license plate film revenue of 126 million yuan (+ 17%), gross profit margin of 49.76% (- 3.88pct). In the face of the downturn of Q1 in the automobile market, the company improves the quality of license plate film, reforms the production process, actively participates in the design of new license plate style, and Q2 recovers quickly. The follow-up new energy license plate, electric bicycle license plate, temporary license plate, new type license plate and so on will still bring a large incremental market space.
Micro-prism film: domestic replacement acceleration after the restoration of capital construction. The revenue of 20H1 microprism film is 112 million (- 16%) and the gross profit margin is 55.05% (- 2.40pct). The customer shutdown in some provinces of Q1 has an impact on the company. With the resumption of road construction and the interruption of the global industrial chain supply by the epidemic, the company is expected to rapidly increase the domestic substitution rate and market share in the second half of the year.
Huawei New Materials: there was a slight decline in the first half of the year, and new customers and new products contributed to future growth. 20H1LCD backlight module material revenue of 117 million yuan (- 16%), gross profit of 17.70% (- 4.09pct), Warwick achieved a net profit of 7.32 million yuan (- 15%). In the second half of the year, Huawei is expected to return to growth: ① brightening film successfully entered Hisense system last year, and to tablet computers, monitors and other small and medium-sized applications; ② quantum dot film continues to expand customers and raw material suppliers to optimize yield; ③ composite film project is expected to release production capacity in the second half of the year; ④ large-size panel prices rebounded, improving the industry chain.
Other new materials business has developed steadily. Aluminum plastic film to improve the yield, consolidate middle and high-end 3C customers, reserve power customers, gross profit margin significantly increased 13.52pct. The export test of PC/PMMA composite film is better than expected, and small batch orders have been realized.
Investment suggestion: we forecast that the company's annual return net profit in 2020-21-22 will be 2.41 million yuan, 347 million yuan, and EPS 0.56 million yuan, corresponding to PE23.5/16.3/12.8 times the current price, and maintain the "buy" rating.
Risk tips: import substitution, customer certification, new product volume progress is not as expected