Event

According to the company's preliminary accounting, the company achieved a total operating income of 3.68 billion yuan in the first half of 2022, an increase of 19%, a return net profit of 75.34 million yuan, an increase of 26%, and a non-return net profit of 71.62 million yuan, an increase of 25%. Comments are as follows:

Brief comment

In 2022, the company's Q2 realized a net profit of 49 million yuan, an increase of 28%, and a ring increase of 88%. According to the company's preliminary calculation, the total operating income of H1 company in 2022 was 3.68 billion yuan, an increase of 19%, and a net profit of 75.34 million yuan, an increase of 26%. Realized deduction of non-parent net profit of 71.62 million yuan, an increase of 25%

According to this calculation, 2022Q2 achieved a total operating income of 1.95 billion yuan, an increase of 10%, a ring increase of 13%; a net profit of 49.21 million yuan, an increase of 28%, and a ring increase of 88%; and a net profit of 47.55 million yuan, an increase of 29%, and a ring increase of 97%.

The rise in the volume and price of copper belt and foil led to steady progress in the company's performance in the first half of the year. In the first half of 2022, the company's production and sales of copper belt and foil increased, the structure adjustment of superimposed products and customers, the added value of products and the proportion of high-end customers increased; under the resonance of quantity and price, the company was not afraid of the impact of the epidemic, and its performance increased against the trend in the first half of the year.

The volume of battery pallets and anticorrosive materials is expected to contribute to the sustained growth of the company's performance in the second half of the year. On the basis of steady progress in the basic plate of the copper processing business, the company is expected to open up a new growth pole through the release of the capacity of battery pallets and anticorrosive materials in the second half of the year; the company has an annual production capacity of 100000 battery pallets, which is in the capacity climbing stage in the first half of the year; 400000 pallets are under construction. The 50,000-ton anti-corrosion and thermal insulation material project under construction is expected to be put into production in October; it is expected that with 100000 pieces of full production capacity, 400000 new pallet production capacity gradually put into production, anti-corrosion and thermal insulation material project completed and put into production, multi-product lines will be launched in the future, and the performance is expected to continue to grow in the second half of the year and in the future.

First, tamping the basic plate of the copper belt and foil business, the volume and profit rise led to the steady improvement of the company's performance in the first half of the year: the production and sales of the company's copper belt and foil increased significantly in the first half of 2022, the structure adjustment of superimposed products and customers, the added value of products and the proportion of high-end customers increased; under the resonance of quantity and price, the company was not afraid of the impact of the epidemic, and its performance maintained steady growth in the first half of the year. After the Yongjie copper project is put into production, the company's production capacity will be "Please climb another high-rise building": the company has an annual production capacity of 100000 tons of copper strip and foil, which has reached full production and sales. In March 2022, Yongjie Copper, a subsidiary, built a project with an annual output of 100000 tons of high-precision copper alloy strip and 50,000 tons of copper strip billet in Nanling County, Anhui Province. the first phase of the project is the annual production line project of 50,000 tons of high-precision copper alloy strip and 50,000 tons of copper strip billet, which is expected to be completed and put into production in 2024. The second phase of the project is the relocation and transformation project. After the current plant area of Yongjie Copper Industry has been collected and stored, it will be relocated to the new plant area as a whole, and the existing annual production capacity of 35000 tons will be raised to 50, 000 tons. It is estimated that the company's annual production capacity of copper belt and foil will reach 200000 tons in 2025. The high-end line is advancing steadily, and the profit per ton of products is expected to continue to grow: in recent years, the company has continuously adjusted its product structure, and the proportion of high value-added products such as superconducting copper foil has increased. In addition, the first domestic Calendering copper foil mill jointly developed by the company and its shareholding subsidiary Luoyang Copper Research has been put into use at the end of 2021. It is expected that with Yongjie Copper's new production capacity and superimposed product structure optimization, the company's copper belt and foil business profitability is expected to grow steadily.

Second, open up new growth poles in the business of battery trays and anticorrosive materials, and the release of production capacity is expected to help the company's performance in the second half of the year continue to exceed expectations. New energy vehicles are "waiting for rice": battery trays are the main load-bearing and protection devices of power battery systems. With the increase in the permeability of new energy vehicles and CTP battery trays in recent years, the demand for power battery trays in China has increased significantly. However, the capacity expansion speed of pallet enterprises is difficult to meet the high demand downstream, and the battery pallet market is facing a serious shortage of supply and demand. According to estimates, we estimate that the gap between supply and demand in 2022-2024 will be 10,000 pieces in 213-70-23.

Full orders for pallet products, the company rapidly expand production to seize market share: the company has an annual production capacity of 100000 battery pallets, the main customers include Nezha, Chery and other car companies, the company pallet product orders are full; according to the FIFA data, Chery new energy vehicles sold 108400 vehicles from January to June 2022, an increase of 222.7% over the same period last year, and a market share of about 4.8%, ranking fourth. From January to June 2022, the sales volume of Nahu new energy vehicles was 63100, an increase of 199.0% over the same period last year, with a market share of about 2.8%, ranking ninth. At present, the company is building 400000 pallets, and it is expected that with the existing 100000 pallets being fully produced and the new pallet capacity gradually put into production, the company's market share in the battery pallet industry will increase rapidly.

Striving to realize the domestic substitution of anticorrosive materials, the military-to-civilian conversion is expected to reduce the dimension: the marine anticorrosive coatings have high scientific and technological content, long development cycle, large investment, high technical difficulty and high risk. at present, the domestic marine anticorrosive coatings market is basically monopolized by giants such as British IP, American PPG and so on. The company acquired Harbin Engineering University's Harbin New Materials Company in 2020, and its core member, Professor Shao Yawei, has been engaged in research and development in the field of metal corrosion protection for a long time, and has won a first prize for scientific and technological progress in the Navy; the company is under construction of 50,000 tons of anticorrosive & thermal insulation materials project is expected to be put into production in the second half of the year, the company is expected to achieve domestic replacement of anticorrosive materials through military conversion to civilian use, while reducing the dimension of domestic anticorrosive coating enterprises.

Investment suggestion

It is estimated that the return net profit of the company from 2022 to 2024 is 180 million yuan, 370 million yuan and 710 million yuan respectively, and the corresponding share price PE is 23.4,11.0 and 5.8 times respectively. Considering the company's position and growth in the industry of copper belt and foil, battery tray, battery aluminum foil and anti-corrosion & thermal insulation materials, the company is given "buy".

Rating.

Risk hint

The progress of the project is not as expected; the competition in the battery tray industry has intensified; the competition in the battery aluminum foil industry has intensified; the COVID-19 epidemic has affected the project schedule and product sales; and the price of raw materials has risen.