The company's 20H1 net profit fell 31.75% from the same period last year, maintaining the "buy" rating company 20H1 realized revenue of 1.545 billion yuan, down 0.95% from the same period last year; and realized net profit of 30 million yuan, down 31.75% from the same period last year. Ting Q2 net profit fell by 11.21 million yuan, down 41.36% from the previous month, and 63.99% from the same period last year. The company's copper strip and foil products focus on power and electronics and other fields, and actively expand production and layout of new materials. We expect the EPS for 20-22 to be $0.40, 0.68, and maintain a "buy" rating.
The production capacity of the company's fund-raising project has been put into production, and downstream customers focus on the power and electronics industries. According to the report in the middle of 20 years, the company's fund-raising project has been put into production in the first half of the year, and the capacity of copper plate, strip and foil has increased from 70,000 tons / year at the end of 1919 to 100,000 tons / year at present. The new production capacity includes 10, 000 tons / year calendered copper foil and 20, 000 tons / year traditional strip capacity. The company's 20H1 achieved an output of 36600 tons, corresponding to sales of 35600 tons; production and sales increased by 6.47% and 3.80% respectively over the same period last year, and the effect of increasing production capacity has not yet been fully reflected. The company's main customer groups include transformer manufacturers, power cable communication cable manufacturers, semiconductor integrated circuit manufacturers, radiator heat exchangers and electronic and electrical products manufacturers.
The company actively distributes new materials such as heat dissipation materials and heavy corrosion.
According to the mid-20s report, Zhongyuan Investment, a wholly owned subsidiary of the company, acquired a 40% stake in Harbin New Materials Technology Co., Ltd. in February and increased its capital by 10 million yuan after the acquisition. Zhongyuan Investment currently holds 70% of the shares; the company's main products include aerogels, anticorrosion and functional materials and solutions. Zhongyuan Investment in April and Dongguan Hailuo Industrial Co., Ltd. jointly funded the establishment of Zhongluo Science and Technology; then on July 14, the company announced the transfer of Dongguan Hailuo Industrial Co., Ltd. the unpaid capital contribution of 6 million yuan and its related rights and interests, realized Zhongyuan Investment 100% holding of Zhongluo Technology. Zhongyuan Technology mainly focuses on the production and R & D of high thermal conductivity materials, high conductive materials, heat dissipation modules and so on.
The profits of the copper industry fell sharply in the first half of the year, and the company's gross profit margin also declined significantly. According to the report, domestic copper production was 9.4 million tons, an increase of 6.1% over the same period last year. However, the efficiency of the industry has declined. The domestic copper calender processing industry (copper sheet, strip and foil products) made a profit of 4.31 billion yuan from January to June, down 37.4% from the same period last year. The expense rate during the 20H1 period of the company decreased by 0.83 pct compared with the same period last year. Due to the deterioration of the competition situation in the industry in the second quarter, the company's gross profit margin in the second quarter was 3.09%, a significant decline compared with 6.27% in the first quarter; 20H1 gross profit margin fell 1.75 pct from the same period last year. As a result, although the company's 20H1 product sales rose slightly by 3.8% and the expense rate decreased during the period, the significant decline in gross profit margin led to a significant decline in 20H1 homing net profit by 31.75%.
The company is actively expanding the production capacity and layout of new materials for copper strip and foil, and maintaining the "buy" rating company's fund-raising project in 20H1 has been put into production, of which 10,000 tons of Calendering copper foil is an important raw material in areas such as FPC (flexible PCB), and the company is also actively laying out new materials such as heat dissipation and heavy corrosion. We estimate that the company's 20-22 net return profit will be 0.98 pound 166 million RMB 244 million (previous value 1.28 pm 2.3 / 304 million RMB). Reference comparable company's 20-year Wind consensus forecast PE, in view of the company's new materials and Calendering copper foil production uncertainty, we give its valuation discount, corresponding to 20-year PE 30 times, corresponding to the target price of 12.00 yuan (the previous value of 17.52-18.98 yuan, before the increase of equity), maintain the "buy" rating.
Risk tips: copper strip and foil demand and product yield are not as expected; the construction of new materials is not as expected.
