Profitability was stable after 22 years of short-term pressure. The company achieved revenue of 1.88 billion yuan in '22, a slight decrease of 5% over the previous year, and the net profit of its mother was 170 million yuan, a decrease of 20% over the previous year. Mainly due to the influence of complex factors such as the macroeconomic downturn, the Russian-Ukrainian conflict, global inflation, and changes in industry cycles, global consumer demand was sluggish, and shipments of smartphones, tablets, and wearable devices all declined to a certain extent. By business, the revenue of functional film materials was 450 million yuan, down 21% from the previous year, and the revenue of electronic grade adhesive materials was 840 million yuan, an increase of 26% over the previous year. Among them, revenue in the second half of the year was basically the same as the previous year. The consolidated gross profit margin in '22 was 29.7%, an increase of 2.7 pct over the previous year. It mainly benefited from a further increase in the revenue share of electronic grade adhesive materials in the core business.
23Q1 saw positive profit growth and increased investment in R&D. The company's revenue increased slightly to 480 million yuan year on year in 23Q1, net profit of the mother was 0.2 billion yuan, up 14% year on year, and gross margin increased 1.4 pct year on year. The Q1 performance was in line with expectations in an environment where overall demand was weak. At the same time, the company increased investment in R&D. The R&D expenses in 23Q1 were 0.4 billion yuan, an increase of 68% over the previous year. The R&D cost rate also increased from 6.8% in '22 to 8.2% in 23Q1.
Products, customers, and application fields are growing in multiple dimensions, and high-value-added products are gradually being released. OCA optical adhesive is a layer of optically transparent double-sided adhesive without a substrate. It has the advantages of being colorless and transparent, ultra-high light transmittance, solidification and shrinkage at room or medium temperature, and is widely used in various display touch screen modules. OCA adhesives have high technical requirements in terms of formulation design, material blending, equipment adjustment, process stability, quality control, die-cutting conversion to back-end applications, etc., resulting in a high threshold for terminal entry. The market is mainly dominated by overseas giants. The company has a number of advanced production lines imported from Japan and Germany. By integrating and customizing glue-release films and PET base films, the revenue side has achieved breakthroughs in stable supply for some terminal brands, achieving product portfolio and customer portfolio upgrades. Moreover, the revenue side has achieved breakthroughs in stable supply for some terminal brands, and the upgrading of product portfolios and customer portfolios. The gross margin level is leading. In addition, the company has applied quite a few products to leading customers in the NEV industry chain, such as insulation coating materials, battery tape, assembly tape, adhesives, etc., which is expected to gradually contribute to the increase in performance.
We forecast the company's net profit to the mother in 23-25 to be 341/494/718 million yuan respectively (the original 23-24 forecast was 386/585 million yuan respectively, mainly lowering the revenue of functional film materials and film packaging materials). According to comparable companies' 31-fold PE valuation level in 23, the corresponding target price was 32.55 yuan, maintaining the purchase rating.
Risk warning
Market competition intensifies, OCA business falls short of expectations, and the risk of fluctuations in raw material prices.