Core views
The company achieved net profit of 66 million yuan in H1 in 2020, an increase of 65.03% over the previous year. Among them, Q2 achieved net profit of 60 million yuan to the mother, a sharp increase of 133.47% over the previous year. With the exception of the medical sector, the three major “electromagnetic light” businesses have all shown growth, and the company has entered a period of performance harvesting. Among them, the target materials business is expected to benefit from the boom in the semiconductor industry and become the main driving force for the company's performance, maintaining the company's “buy” rating.
2020H1 revenue/net profit was +31.93%/65.03%, respectively. In 2020, H1 achieved revenue of 5.090 billion yuan, an increase of 31.93% over the previous year; achieved net profit of 66 million yuan, an increase of 65.03% over the previous year; and achieved net profit of 39 million yuan after deducting non-return to the mother, an increase of 126.14% over the previous year. Among them, Q2 2020 achieved revenue of 2,866 billion yuan, an increase of 27.06% over the previous year; net profit of the mother was 60 million yuan, a sharp increase of 133.47% over the previous year. The main reason for the increase in performance was the increase in revenue in the electrical, magnetic, and optical sectors. Among them, the electrical sector, which is dominated by rare earth targets, saw the biggest increase.
The target materials business is already gaining strength, and it is expected to be the main driving force for the company's performance in the future. In 2019, the company's target business developed by leaps and bounds. The products were successfully transformed from 4-6-inch to 12-inch target products. Key products such as copper targets and anodes, cobalt targets, titanium targets, etc. were supplied in large quantities. In the first half of 2020, sales of 12-inch targets increased 228% year-on-year, and many 12-inch products passed market certification for high-end customers such as SMIC, Dalian Intel, and TSMC. Affected by the epidemic in overseas markets, the target materials subsidiary Youyuan Yijin achieved net profit of 61 million yuan in 2020 H1, an increase of 159% over the previous year. With the development opportunities for domestically produced targets brought about by the future shift of the semiconductor industry chain to the country, the company's performance is expected to continue to increase dramatically.
The results of corporate mergers and acquisitions integration, transformation of scientific research results, and market development have been shown, and performance has entered a harvest period. 1) Magnetic sector: The rapid integration of Hongxiushan Magnetic Industry and Magnet was successfully achieved. H1 achieved revenue of nearly 100 million yuan in 2020, an increase of 25% compared to the same period before the acquisition, and turned a loss into a profit after the acquisition; 2) Optical sector: 4-inch VGF gallium arsenide single crystal, which has now passed customer verification. Sales revenue of H1 infrared products in 2020 increased 28% over the same period last year; 3) Medical sector: complete the phased goal of building an orthodontic product family, actively promote the layout of the digital medical device industry, actively promote the layout of the digital medical device industry, launch of the first digital dental medical device product system, and medical interaction system. platform Officially launched.
Risk factors: The epidemic affected the recovery of downstream demand, the prosperity of the semiconductor industry fell short of expectations, and the release of the company's target material production capacity fell short of expectations.
Investment advice: The company's performance increased sharply in the first half of 2020, with the second quarter's performance improving significantly month-on-month.
After the epidemic gradually abated, the company's “electromagnetic optomedicine” business segments all entered a performance release period. In particular, the target materials business is expected to benefit from the boom in the semiconductor industry and grow rapidly. Maintain the company's net profit forecast for the year 2020 to 2022 at 186/333/569 million yuan, corresponding to the EPS forecast of 0.22/0.39/0.67 yuan/share for the 2020-2022 EPS. Considering that the company's current target material business profit release exceeded expectations, it was given 1.1 times the PEG valuation in 2020, corresponding to the target price of 18.1 yuan, maintaining the company's “buy” rating.
