The company released its 2022 annual report, achieving a profit of 521 million yuan for the whole year, a decrease of 5.36% over the previous year. The company made a profit of 37 million yuan in the first quarter of '23, a decrease of 78.83% over the previous year. The company actively deployed new products, and later profits are expected to pick up and maintain its stock growth rating.
Key points to support ratings
Profit in 2022 decreased 5.36% year on year: the company released its 2022 annual report, achieving a profit of 521 million yuan for the whole year, a decrease of 5.36% over the previous year; after deducting non-profit profit of 516 million yuan, an increase of 3.69% over the previous year. According to estimates in the company's annual report, 2022Q4 achieved a profit of 83 million yuan, a year-on-year decrease of 46.82%; after deducting nonprofit of 85 million yuan, a year-on-year decrease of 35.43%.
2023Q1's profit decreased 78.83% year on year: The company also released its quarterly report of '23. The company also achieved revenue of 994 million yuan in the first quarter, an increase of 2.2% over the previous year, and a profit of 37 million yuan, a decrease of 78.83% over the previous year.
Shipments of lithium battery copper foil are growing rapidly, and profits from standard copper foil are under pressure: the company's copper foil shipments showed a sharp upward trend, achieving 49,000 tons of copper foil sales throughout the year, an increase of 76.61% over the previous year. Among them, copper foil of 6 microns and below was sold 40,000 tons, and copper foil products above 6 microns were sold at 90,000 tons. By product, lithium battery copper foil achieved revenue of 4.466 billion yuan, an increase of 77.29% over the previous year, with a gross profit margin of 20.49%, a decrease of 9.82 percentage points over the previous year; standard copper foil achieved revenue of 174 million yuan, a decrease of 38.72% over the previous year, and the gross profit margin was 5.42%, a decrease of 22.81 percentage points over the previous year.
New production capacity is gradually being implemented, and composite copper foil technology is actively deployed: the company has a copper foil production capacity of more than 50,000 tons by the end of 2022. Among them, the Baidu Jiayuan 31,000 ton project has been fully put into operation, the Jiangxi Jiayuan 20,000 ton project began trial production at the end of December 2022, the Ningde Jiayuan 15,000 ton project was tested in February 2023, and Shandong Jiayuan's expansion of 5,000 tons of production capacity has already been implemented. The company set up a joint venture with Ningde Times to invest in the construction of a copper foil project with an annual output of 100,000 tons. Trial production is expected to begin in the second half of 2023. The company actively deployed composite copper foil technology, built a new PET composite copper foil test workshop and purchased PET composite copper foil pilot equipment, and actively carried out research and development and verification of composite copper foils such as PET, PP, PI, etc.
valuations
Based on the company announcement and recent changes in copper foil market prices and future supply and demand patterns, we adjusted the company's 2023-2025 earnings per share forecast to 2.07/2.75/3.51 yuan (the original forecast for 2023-2025 diluted earnings per share was 4.80/6.90/-), corresponding to a price-earnings ratio of 17.9/13.5/10.6 times; maintaining the increase in holdings rating.
The main risks faced by ratings
Demand in the industrial chain fell short of expectations; raw material prices fluctuated unfavorably; the impact of the epidemic exceeded expectations; NEV industry policies fell short of expectations; and NEV products fell short of expectations.