Description of the event
In 2022, the company achieved revenue of 1.88 billion yuan (-5.4% year-on-year), attributable net profit of 170 million yuan (-20.0% year-on-year), and vested non-net profit of 140 million yuan (-18.0% year-on-year), of which Q4 achieved revenue of 260 million yuan (-51.7% year-on-year), achieved attributable net profit of -156,000 yuan, and realized vested non-net profit of -100 million yuan. Q1 2023 achieved revenue of 480 million yuan (+1.0% year on year), achieved net profit of 20 million yuan (+13.8% year on year), and achieved attributable non-net profit of 0.2 million yuan (+13.4% year-on-year). The company plans to distribute a cash dividend of 0.6 yuan (tax included) for every 10 shares to all shareholders and transfer 4 shares to every 10 shares using the Capital Provident Fund.
Incident comments
The company opened up development boundaries for leading functional coating composites and expanding horizontally and vertically. The company's main products are divided into functional film materials, electronic grade adhesive materials, polymer film materials, thermal management composites and film packaging materials, which are used in key fields such as consumer electronics, new displays, new energy vehicles, household appliances, ceramic capacitors, etc. The company continues to expand new categories, focusing on OCA adhesives and coatings, precision release films, upstream PET-based films, homemade glues, etc., expanding horizontally and vertically to continuously enhance the company's core competitiveness.
Demand for consumer electronics is weak, and some businesses are under pressure. Since the second half of 2022, demand for terminal consumer electronics has weakened. In particular, in the fourth quarter, the company's sales were particularly affected by the external environment. Revenue of electronic grade adhesive materials, functional film materials, and film packaging materials throughout the year changed +26.4%, -20.5%, -14.4%, gross margin changed -2.2 pct, -2.6pct+3.4 PET. Among them, functional film materials and film packaging materials were greatly affected by the decline in the consumer electronics boom. The electronic grade adhesive materials sector grew against the trend, or mainly because of investment projects, OCA Optics This is due to the start of production and release of the adhesive film production and construction project in mid-2022.
Projects under construction continue to advance, and there is broad scope for the future. The company raised funds through IPOs and fixed increases and invested in multiple projects. Currently, the OCA fund-raising project and PET base film line 1 have been successfully put into operation and release. Projects such as precision release film coating, functional tape, polarizer protective film, PET base film line 2/3 are in the process of progress. In the future, production and release will be gradually put into operation to increase the company's profits.
Consumer electronics are expected to pick up at the bottom, and there is broad scope for local replacement of OCA optical adhesives and precision release films. The terminal consumer electronics industry is at the end of warehouse removal, and the industry is expected to see improvements. OCA optical adhesive products have high added value. Precision release films are mainly used for OCA optical adhesives, MLCCs, polarizers, etc. According to OCA's demand estimates in various fields such as downstream smartphones, tablets, PCs, TVs, vehicle displays, and wearable devices, the global market space for OCA glue in 2021 was 27.7 billion yuan, and the corresponding OCA release film market space was 2.93 billion yuan. With the switch from 4G to 5G, the rise of wearable devices, and the rapid increase in the penetration rate of new energy vehicles, global MLCC usage will continue to grow rapidly. It is expected that from 2021 to 2025, the global MLCC release film market space will increase from 26.5 billion yuan to 36.1 billion yuan: 2021 global polarizer market space The demand is 510 million square meters, and the corresponding polarizer release film market space is 9.18 billion yuan.
The company is at the leading level in the field of new adhesive materials and functional films. The volume of OCA adhesive released and the localization of high-end release films have opened up space for future development. Net profit attributable to 2023-2025 is expected to be $29/44/60 million. Maintain a “buy” rating.
Risk warning
1. The recovery in downstream demand fell short of expectations:
2. The progress of the new project is lower than expected.