Incident: The company published its 2021 report on April 20, 2022, and the first quarter report of 2022 on April 26, 2022.
1) Looking at the whole year, the company achieved operating income of 4,082 million yuan, an increase of 65.92% over the previous year; achieved net profit of 368 million yuan, an increase of 412.46% over the previous year; after deducting non-net profit of 349 million yuan, an increase of 507.88% over the previous year.
Looking at a single quarter, 21Q4 achieved revenue of 1,010 million yuan (up 37.66% year on year, down 11.82% month on month), net profit returned to mother of 84 million yuan (up 182.74% year on year, down 25.75% month on month), and achieved net profit of 80 million yuan after deducting non-net profit (up 220.00% year on year, down 50.27% month on month).
2) 22Q1 achieved revenue of 943 million yuan (up 7.02% year on year, down 6.62% month on month), net profit of the mother was 98 million yuan (up 33.58% year on year, up 17.38% month on month), and achieved net profit of 90 million yuan after deducting non-net profit (up 25.80% year on year, up 12.50% month on month).
Profits in high-performance electronic copper foils have led to a sharp rise in profits. Volume: The company produced 41,000 tons of copper foil in 2021. Assuming that PCB copper foil accounts for about 65%, PCB copper foil is 27,000 tons, lithium battery copper foil is 14,000 tons; price: the average sales price of copper foil is 910,000 yuan/ton; profit: the gross margin of copper foil products is 17%, net interest rate 9%; gross profit per ton is 15,600 yuan, net profit per ton is 0.9 million yuan.
The product technology industry is leading the way, and the 20,000 ton copper foil project is progressing steadily. High-end copper foil is an important barrier to enterprise competition in the copper foil industry: in terms of PCB copper foil, the RTP copper foil and HVLP copper foil developed by the company for 5G have extremely low surface roughness, which can effectively reduce signals in high-frequency signal transmission, ranking first among domestic manufacturers; in terms of lithium battery copper foil, the penetration rate of the company's 6μm products is also rapidly increasing among major customers such as BYD. The company's current PCB copper foil production capacity is 25,000 tons, and the production capacity under construction of 10,000 tons (IPO fund-raising project) is expected to reach production by the end of the year, reaching the planned production capacity in 2023; the current lithium battery copper foil production capacity is 20,000 tons. It was announced in April this year that Tongling Copper Foil will build a new 20,000 ton project with an estimated investment of 1.7 billion yuan. It is expected to be put into operation next year. The company is steadily advancing production capacity, and is expected to have a production capacity of 55,000 tons within the year and 75,000 tons within next year.
The copper foil industry is booming, and barriers such as production capacity, technology, capital, and customers have built a moat. Thanks to the rapid development of the new energy vehicle industry and the 5G communication industry for copper foil terminals, the market demand for its upstream electronic copper foil has increased rapidly. Although the production capacity of the copper foil industry has expanded rapidly in the past two years, some market investors are concerned that the industry's supply and demand pattern has deteriorated, leading to poor profitability of companies in the industry, but we believe that the copper foil industry has high barriers: Downstream customers have large orders and will not choose manufacturers with smaller production capacity. There are many small manufacturers in the industry that are expanding in a disorderly manner, and this part of the nominal production capacity will not be released, and orders from large manufacturers are still in short supply; 2) Technology: The quality of copper foil does not simply depend on whether it can break through the requirements of extremely thin copper foil, etc. Foil manufacturers have accumulated know-how through a long period of production and development, For example, additive selection, equipment commissioning, etc., these all have a great impact on the uniformity, consistency, and yield of products; 3) Funding: As an asset-heavy link in lithium battery materials, and the current scale of industry expansion is large, the capital requirements for production expansion are increasing; 4) Customers: after entering the supply chain of important customers, continuous production and unified specifications can improve yield, and new entrants will also face large barriers. First, customers who are used to supplying copper foil factories will not necessarily choose to enter new suppliers The person's product. Based on the above considerations, we believe that as a leading enterprise in the copper foil industry, the company has steadily and steadily promoted the expansion of production capacity. It has excellent products and stable large customers in the fields of standard foil and lithium battery copper foil, and has good growth potential.
Investment advice
The company's production capacity layout is reasonable, the product technology is leading the industry, the project is progressing steadily, and the market share continues to increase. At the same time, in the post-pandemic era, the NEV industry and the 5G communications industry are rapidly picking up, the price of copper foil continues to rise, and the company's high-performance electronic copper foil products are expected to achieve sustainable rapid profits. We expect the company to achieve net profit of 496/665/736 million yuan respectively in 2022-2024, with year-on-year growth rates of 35%/34%/11% respectively. The corresponding PE was 16X/12X/11X respectively, maintaining the “buy” rating.
Risk warning
Risk of a slowdown in 5G commercial progress; risk of adjustment of NEV subsidy policies; risk of continuing epidemic.