Events:
On October 24th, the company released its report for the third quarter of 2023, which showed that its operating income in the first three quarters was 1.127 billion yuan, an increase of 13.51% over the same period last year. The net profit of returning to the mother was 172 million yuan, an increase of 15.14% over the same period last year. Realized deduction of non-return net profit of 171 million yuan, an increase of 19.84% over the same period last year; operating income of 414 million yuan in the third quarter, an increase of 47.62% and 2.29% over the same period last year; net profit of 72.1391 million yuan, an increase of 79.38% over the same period last year; and net profit of 72.0248 million yuan, an increase of 99.02% over the same period last year.
Comments:
The operating situation continued to improve in the third quarter, and the downstream terminal demand picked up. In the third quarter of 2023, the demand of downstream terminal consumer electronics, new energy vehicles and other industries continued to recover, leading to the recovery of demand for mid-stream MLCC. The growth rate of the company's paper belt and plastic belt continued to improve, reaching more than 70% by the end of the third quarter. At present, the inventory level of the industrial chain is at a low level, with the recovery of downstream terminal demand. The improvement of the downstream customer growth rate will lead to the continuous improvement of the company's product growth rate, so that the company's business situation will continue to improve.
The marginal improvement of profitability is obvious, and the market position of paper tape has been continuously consolidated. The gross profit margin reached 40.20% in the third quarter of 2023, an increase of 6.4pct from 33.80% in the second quarter, and a significant improvement in profitability. At present, the annual production capacity of paper carrier is 91200 tons, which is mainly used in the field of MLCC, mainly for small and medium-sized capacitors, inductors and other passive components, while large-size passive components are mainly packaged with plastic tapes. The company is a supplier of base paper, paper tape processing and a full range of upper and lower tape products in the whole market. at present, the global market share of its paper tape products is more than 60%, and the competitive advantage is obvious. Downstream customers mainly include South Korea's Samsung, Japan's Murata, Japan's Panasonic, Sun Yodian, Huaxin Technology, Guoju Electronics, Housheng Electronics, Fenghua Hi-Tech, Sanhuan Group, Shunluo Electronics and other well-known enterprises at home and abroad. among them, Samsung of Korea has awarded the company "excellent supplier", "2021 Best supplier Award Special Award", Japan Murata has awarded the company the title of "excellent partner" and so on.
Release membrane business progress in an orderly manner, has been with a number of well-known customers batch supply. At present, the company's MLCC release film has achieved stable batch supply to Guoju, Huaxin Technology, Fenghua Hi-Tech, Sanhuan Group and other major customers, and has reached a cooperative relationship with a number of well-known polarizer enterprises, and is currently laying out new products including release film, casting film, BOPET film and so on.
Investment advice: give a "buy" rating. It is optimistic that the recovery of downstream demand of the company will lead to the continuous improvement of the company's business situation, as well as the positive layout and volume in the field of membrane materials. It is estimated that the operating income of the company from 2023 to 2025 is 1.656 billion yuan, the net profit of return to the mother is 2.41 million yuan, and the corresponding PE is 46.72, 25.07, respectively.
Risk hint: the progress of new product verification is slow, and the recovery of downstream terminal demand is not as expected.