Event: according to the company's semi-annual report on 2023, H1 Company realized revenue of 172 million yuan in 2023, + 0.31% year-on-year, realized net profit of-44 million yuan, year-on-year-35.69%, and deducted non-net profit of-52 million yuan, year-on-year-37.80%. From a quarterly point of view, the company's Q2 revenue in 2023 was 96 million yuan, year-on-year + 27.16%, month-on-month + 25.46%; net profit-22 million yuan, year-on-year-11.77%, month-on-month-0.31%; deduction of non-net profit-25 million yuan, year-on-year-13.62%, month-on-month + 8.91%.
Performance is under short-term pressure, waiting for demand to recover: in 2023, H1's revenue was basically flat compared with the same period last year, mainly because the solid growth of the copper foil business offset the weakness of the shielding film business. From a product point of view, the revenue of H1 copper foil and shielding film in 2023 was 0.85 million yuan respectively, which was 16.43% compared with the same period last year. In 2023, H1 company's gross profit margin was 25.62%, year-on-year-0.66pct; net profit margin was-24.48%, year-on-year-6.95pcts. The sharp decline in net interest rate is mainly due to: 1) the decline in the volume and price of shielding film business affected by the decline in terminal sales of smart phone products; 2) affected by the overall supply and demand of the electronic copper foil industry, the price of the company's standard electronic copper foil products (mainly refers to processing fees) has further declined, and the copper foil production cost of the superimposed company is higher, resulting in a decline in copper foil business profits compared with the same period last year. 3) with the production and R & D base of the company's headquarters and Zhuhai Dachuang production and R & D base put into use, the depreciation of fixed assets has increased compared with the same period last year. In terms of expenses, the H1 sales / management / R & D / financial expense rates in 2023 were 3.18% 14.31% 17.02% and 0.26% respectively, year-on-year changes + 0.26/+4.06/-6.29/-0.34pct, and R & D expenses decreased by 10.67 million yuan over the same period last year, mainly due to the decrease in R & D activities affected by the epidemic in the first quarter, and the company has accelerated the progress of new product / new technology development and customer certification in the second quarter. Great progress has been made in some new products, such as peelable copper and composite copper foil, and some customer sample orders have been obtained. At the same time, the company has strengthened the management of R & D materials, ensuring the development of new products and improving the efficiency and effectiveness of R & D.
The electromagnetic shielding film technology is leading, and the consumer electronics boom is expected to pick up: according to the company's 23-year mid-year report, the company is one of the few manufacturers in the world that master ultra-high shielding effectiveness and extremely low insertion loss core technology. the market share is the first in China and the second in the world. The company's electromagnetic shielding film products fill the gap in the field of high-end electromagnetic shielding film in our country, break the monopoly of overseas enterprises, and are widely used in well-known terminal brand products such as Huawei, XIAOMI, OPPO, VIVO, Samsung and so on. In 2023, H1, affected by the weak demand for consumer electronics downstream, the company's shielding film business declined greatly. According to the latest IDC forecast, the global smartphone market will recover in 2024, grow 4.5 per cent year-on-year, and grow at a low single-digit rate in 2025-2027, with a CAGR of 1.7 per cent in 2023-2027. We believe that with the recovery of downstream consumer electronics demand, the company's shielding film business is expected to enter the performance repair fast track.
The new product is progressing smoothly, and the strippable copper / FCCL opens the growth space: peelable copper is not only a necessary substrate for the preparation of chip packaging substrate and HDI board, but also a necessary material for IC carrier board and class carrier mSAP process. The belt carrier peelable ultra-thin copper foil produced by the company is mainly used in BT carrier plate and class carrier plate. At present, the global market for strippable copper is about 3 billion, with the domestic market accounting for about 20 per cent of the total. In 2023, H1, many of the company's new products are progressing smoothly, among which: 1) strippable ultra-thin copper foil with carrier is currently undergoing customer certification, and the sample delivery quality is stable. A wide product has passed the physical properties and process tests of some carrier plate manufacturers, and has passed the first round verification of some terminals, and has obtained small orders. 2) FCCL is the substrate for the preparation of FPC, and small batch production is under way. Conventional FCCL will implement small orders for H1 in 2023. Ultra-thin FCCL is still in the customer test certification stage; 3) Resistive thin film products are mainly used in smart phone acoustic components, currently in the customer certification stage, some products have passed the relevant customers' basic physical properties and process tests, batch stability tests, terminal certification is under way; 4) PET copper foil is mainly used in new energy battery negative current collector. At present, the company PET copper foil has sent samples to some downstream customers.
With the subsequent verification of new products, gradually achieve volume sales, the company's performance is expected to continue to grow.
The company's main business is R & D, production and sales of high-end electronic materials, focusing on providing high-end electronic materials and application solutions. the existing products are mainly electromagnetic shielding film, all kinds of copper foil, flexible copper clad laminate, resistive film, composite copper foil, etc., of which shielding film and standard electronic copper foil constitute the main source of revenue of the company. The company has strong technological innovation strength in the field of high-end electronic materials. We are optimistic that the company, as the leader of domestic electromagnetic shielding film, is actively developing a variety of new products such as peelable copper, extremely thin FCCL and resistive film, which is expected to directly benefit from the advanced packaging of downstream chips and the continuous growth of demand for new energy vehicles, opening up growth space for future performance. It is estimated that the net profit of the company from 2023 to 2025 is-66 million yuan, 55 million yuan and 115 million yuan, the EPS is-0.83,0.69,1.43 yuan respectively, and the PE for 24-25 years is 68x and 33x respectively.
Risk hints: macroeconomic fluctuation risk, lower-than-expected demand, raw material price fluctuation risk, exchange rate fluctuation impact.