occurrences
On August 29, the company released its semi-annual report for 2023. 1H23 achieved revenue of 180 million yuan, a decrease of 22.56%; realized net profit of 38 million yuan, a decrease of 32.36%; achieved net profit of 36 million yuan without return, a decrease of 30.55%. 2Q23 achieved revenue of 100 million yuan, an increase of 27.85%, net profit attributable to parent of 22 million yuan, an increase of 37.5%, net profit of 19 million yuan after deducting non-attributable net profit of 119 million yuan, an increase of 35.71%.
reviews
Breakthroughs in new fields mitigated the impact of the decline in consumer electronics, and Q2 performance improved month-on-month. Downstream demand for consumer electronics slowed down in the first half of the year, and customers switched from the high-priced cobalt-chromium series to the low-cost iron-based series. As a result, the unit price of atomized alloy powder dropped by 85% and gross margin by 13pcts, but sales volume increased by 47%. Furthermore, the company made breakthroughs in emerging application fields such as automotive electronics and folding screen hinges, mitigating the impact of the decline in traditional markets. Thanks to the competitiveness of the core products of carbonyl iron powder, the company's overall gross margin increased by 3.04 pcts in the first half of the year. Downstream inductor components in the automotive, server and other fields were in strong demand for ultra-fine particle size powders and high temperature resistant powders, and the company's Q2 performance improved markedly over month.
The leading domestic carbonyl iron powder, fund-raising projects will soon be released. The company's carbonyl iron powder particles are micron in diameter, with a production capacity of 5,205 tons in 22 years. About half of this is sold externally, while the other half produces deep-processed products such as soft magnetic powder. The company has broken the German monopoly of BASF. Currently, it accounts for more than 20% of the domestic carbonyl iron powder market. The 6,000-ton IPO fundraising project is expected to be put into operation in September 23.
The company sold 723 tons of atomized alloy powder in '22, and the 4,000-ton IPO fundraising project is expected to be put into operation in September '23, including 3D printing powder, powder for high-performance magnetic powder cores, etc. The company continues to promote the application of integrated inductors in the field of AI chips such as high-computing power graphics cards, mass production of soft magnetic powders for electric power, and expansion in emerging fields such as 3D printing and soft magnetic motors.
The construction of new cost reduction technology projects opens up room for growth. The company's key cost reduction process has made a major breakthrough. It creatively replaces high-purity iron from the original process with recycled materials and minerals with a higher impurity content, etc., and invested in the construction of the “100,000 tons of metal soft magnetic micro-nano powder project” in Ningxia. On the one hand, it can form a partial or complete replacement for competing processes with lower performance, and on the other hand, it can increase the breadth and depth of penetration of carbonyl iron powder in existing application fields, and expand its application in the field of high-value-added, high-precision electronic power. The three-phase project is expected to be put into operation one after another starting in '24, which is expected to open up room for the company to grow.
Profit Forecast & Investment Advice
It is estimated that the company's revenue for 23-25 years will be 488 million yuan, 625 million yuan, and 843 million yuan respectively; net profit to parent will be 118 million yuan, 159 million yuan, and 224 million yuan respectively; corresponding EPS will be 138 yuan, 1.86 yuan, and 2.62 yuan respectively; corresponding PE will be 31 times, 23 times, and 16 times, respectively, maintaining the “buy” rating.
Risk warning
Production capacity expansion falls short of expectations; market demand falls short of expectations; risk of management holdings reduction, etc.