Automobile & infrastructure demand lags behind, Q2 performance continues to pick up
The company's 2020H1 revenue is 573 million yuan (- 7.5%) and the net profit is 91 million yuan (- 4.5%).
In the first half of the year, downstream infrastructure and automobile demand stagnated business performance, Q1 home net profit of 43 million (- 13.6%), Q2 of 48 million yuan (+ 5.53%), performance accompanied by a significant pick-up in downstream demand. 2020H1's gross profit margin decreased by 1.48pct to 35.27% year-on-year, while net profit margin increased by 0.25pct to 15.50% year-on-year, indicating the company's strong cost control ability.
The epidemic briefly affected the company's profits, and the main business grew strongly in the second half of the year. 1) in the public safety protection sector, sales declined in the first quarter due to the downturn in the automobile market, and new energy vehicles, commercial vehicles and motor vehicles picked up one after another in the second quarter. Revenue in the first half of the year was 125 million yuan (+ 17%).
Several factors support the performance in the second half of the year: the automobile market continues to pick up, the license plate demand for electric vehicles is enhanced, the size of the new license plate is large, and the demand for unit materials is large. It is estimated that the market size of license plate film stock in 2020 exceeds 4.5 billion yuan; the total market demand for road reflective film increment and stock is about 16 million square meters. 2) the revenue of 2020H1 microprism reflective materials was 111 million yuan (- 15.7%), mainly due to the stagnation of processing signage customers in some provinces in the first quarter, and the gradual recovery of infrastructure after the second quarter. Huawei new material production is on the right track, the current quantum dot film sales supply, South Korean manufacturers in the first half of the year entry debugging is blocked, the second half of the year will release production capacity.
New business expansion will continue to contribute to the company's performance increment.
1) Aluminum-plastic film: the company has completed the customer structure adjustment, and the products are concentrated in the consumer electronics field. Although the energy storage field has achieved a technological breakthrough, the production capacity has not been achieved on a large scale, and the 3C and energy storage customers will be expanded in the second half of the year. 2) Electronic function plate: in the first half of the year, PC/PMMA films were supplied in small quantities, some of the release materials were sold to reflective materials, and some were sold to the adhesive and electronic packaging industry, with sales of 24.98 million yuan (+ 12.8%) in the first half of the year.
Investment advice: maintain a "buy" rating
We expect the company to have a revenue of 15.72 million in 2020 to 2022, with a net profit of 2.45 million, 3.50 and 438 million, a year-on-year increase of 24%, 43%, 25%, 0.39 and 0.56, respectively. The current stock price corresponds to PE of 23-16-13, maintaining a "buy" rating.
Risk Tips:
The risk of price fluctuation of raw materials; the production of new products is not as expected; and the overseas epidemic affects exports.