Incident: The company released its semi-annual report for 2023, with operating income of 2,078 billion yuan, an increase of 7.42%; net profit of 21 million yuan, a year-on-year decrease of 92.62%; net profit after deducting non-net profit of 06 billion yuan, a year-on-year decrease of 97.97%.
Comment:
23Q2 performance turned to losses, downstream demand was weak, production capacity utilization was low, competition was intensified, and processing costs declined: Q2 achieved revenue of 1,094 million yuan, up 12.6% year on year, up 11.18% from the previous year; net profit attributable to the same month, net profit after deducting non-attributable net profit - 0.3 million yuan, the same month-on-month performance loss was mainly due to: 1. Production and sales of new energy vehicles did not meet expectations, and the pressure to reduce terminal product sales prices continued to be transmitted to the upstream industry chain; 2. Downstream companies continued to inventory, and the industry's capacity utilization rate was low; 3. Competition in the foil industry has intensified, and processing costs have dropped relatively Many.
Production capacity continued to expand, and sales volume increased steadily: the company's 23H1 achieved sales volume of 24,800 tons of copper foil, an increase of 34% over the previous year; of these, the sales volume of lithium copper foil of 6 μm and below was about 20,700 tons, accounting for about 83.5%. As of the end of the 23H1 period, the company's copper foil production capacity is expected to be 80,000 tons/year. The company's projects with an annual output of 20,000 tons of high-performance electronic copper foil in Longnan and 15,000 tons of high-performance electronic copper foil in Ningde have been completed and tested one after another and have entered the climbing stage. The project with an annual output of 100,000 tons at the Meixian Chengdong base in cooperation with Ningde Times will be implemented in stages according to market conditions.
Leading the development of ultra-thin copper foil, actively promoting the transformation of composite copper foil: the company invested a total of 120 million yuan in 23H1 R&D, an increase of 15.97% over the same period last year. The company's high-strength high-ductility double-sided 5 micron copper foil and ultra-high-strength double-sided 5 micron copper foil have been supplied in batches or are being tested by customers. The company actively promotes the development and process optimization of composite copper foil. Currently, the company's composite copper foil pilot production equipment has been installed.
Profit forecast, valuation and rating: Increased competition in the lithium battery copper foil industry led to a decline in processing costs, which affected the company's profit level. The net profit forecast for 23-25 was lowered to 1.06/198/343 million yuan (85%/81%/72% respectively), corresponding to PE 84/45/26X. The company's production capacity scale is leading in the industry, and the reduction in processing fees affects profit levels. Composite copper foil has led to hidden concerns about technology route substitution, and has been downgraded to a “increase in holdings” rating.
Risk warning: Downstream demand falls short of expectations, raw material prices fluctuate, capacity construction falls short of expectations, technology route substitution risks.