Event: copper crown copper foil hair cloth three quarters report in 2023. The company's income in the first three quarters of 2023 was 2.777 billion yuan, + 0.61% compared with the same period last year, the net profit returned to the mother was 5.8452 million yuan,-97.43% compared with the same period last year; the income from Q3 alone was 1.024 billion yuan, + 31.16% from the same period last year, and the net profit returned to the mother was-22.3512 million yuan,-163.16% compared with the same period last year.
Copper foil processing fee revenue declined, the company's performance in the first three quarters under pressure. In the context of the slowdown in global economic growth, the pressure on downstream consumer electronics demand and increased market competition, the company's copper foil processing fee income declined. In the first three quarters of 2022, the net cash flow generated by the company's operating activities was-7.3733 million yuan, and the gross profit margin / net profit margin was 2.49% / 0.21% respectively, which decreased significantly compared with the same period last year.
Product structure continues to optimize, high-end PCB copper foil continues to take the lead. The company adheres to the development model of lithium battery copper foil + PCB copper foil two-wheel drive. In terms of products, the company promotes its core technology and strengthens the research and development of lightweight and high tensile products. According to the announcement, the proportion of lithium battery copper foil with 6 μ m or less in the total output of lithium battery copper foil reached 92.16% in the first half of 2023, and 3.5 μ m lithium battery copper foil has been successfully developed. The increase in the proportion of high-end products is expected to lead to the growth of the company's profitability and enhance the competitiveness of products. In terms of production capacity, the company has an annual production capacity of 55000 tons and a production capacity of 25000 tons under construction, of which Tongling Copper Crown 10,000 tons has entered the stage of equipment procurement and installation, and the subsequent increase to 80,000 tons will further improve the company's performance.
Investment suggestion
With the steady progress of the company's capacity expansion, with the recovery of the downstream market and the continuous increase in the proportion of high-end products, the company's performance has room for repair. we estimate that the company's net profit from 2023 to 2025 will be RMB 0.93 billion (the previous net profit is RMB 665 million in 2023, considering the lower-than-expected decline in copper foil processing fees.) The corresponding PE is 106.5, 39.1 and 25.8 times, respectively, which is adjusted to the "overweight" rating.
Risk hint
Capacity release is less than expected; downstream demand is declining; industry competition is intensified.