Event: the company publishes its semi-annual report 2020. The company's 2020H1 realized revenue of 125 million yuan, down 21.47% from the same period last year, and realized net profit of-2.7527 million yuan, down 129.51% from the same period last year. Of this total, Q2 realized revenue of 73 million yuan, down 30.33% from the same period last year, and realized net profit of-1.2679 million yuan, down 115.90% from the same period last year.
Revenue is down and performance is under pressure. 1) the company's 2020H1 revenue decreased by 21.47%, of which the main business income was 124.4767 million yuan, a decrease of 2.90% compared with the same period last year. Other business income dropped to 171600 yuan from 30.5252 million yuan in the same period last year. 2) the company's 2020H1 gross profit margin decreased to 19.24% from 19.47% in the same period last year, in which the gross profit margin of evaporated materials increased to 31.46% and that of sputtered targets increased to 19.10%. 3) the rate of expenses during the 2020H1 period of the company decreased to 12.87% from 22.60% in the same period last year, of which the rate of management expenses increased from 3.68pp to 8.22%, mainly due to the increase in intermediary fees such as consulting and the salary of employees; the rate of R & D expenses increased by 2.51pp to 5.82%, mainly due to the increase in depreciation expenses of R & D expenditure; and the rate of financial expenses increased to 4.37%, mainly due to the increase in interest payments.
The company issued a prospectus for issuing shares to specific targets in 2020, and proposed to raise no more than 530 million yuan. The non-public offering is aimed at no more than 35 specific investors and no more than 42.336 million shares are issued. The funds raised are mainly invested in four major projects. 1) flat panel display sputtering target construction project. The construction period of the project is 3 years. After the completion of the project, it will form an annual production capacity of 800 tons of molybdenum targets, 350 tons of aluminum targets and 50 tons of silicon targets. 2) industrialization construction project of copper target for ultra-high definition display. The construction period of the project is 2 years, and after completion, an automatic production line of copper targets can be established to lay out the high-end display industry. 3) R & D and construction of aluminum-scandium target and molybdenum target. This project plans to purchase all kinds of advanced R & D equipment for the R & D and trial production of aluminum-scandium target and molybdenum target. The sputtering target is the key coating material for 5G communication chip. 4) replenish the working capital of 150 million yuan. Further enhance the company's capital strength, optimize the asset structure, and provide reliable liquidity guarantee for the company's future business development.
Profit forecast and investment advice. We estimate that the company's net profit from 2020 to 2022 will be 0.12,0.14 and 16 million yuan respectively, and the EPS will be 0.08,0.10 and 0.12 yuan respectively. The company's stock price on August 27, 2020 will correspond to 358X, 293X and 259X. We are optimistic about the application prospect of the company in the field of sputtering targets and evaporation materials, and will be given a "hold" rating for the first time.
Risk hints: risks such as lower-than-expected progress of fund-raising projects, fluctuations in raw material prices, lower-than-expected demand in the industry, and so on.
