Incident: The company released its 2023 performance forecast. Net profit due to mother is expected to be 185-225 million yuan in 2023, with a year-on-year growth rate of 73.80%-111.37%. Net profit after deduction is estimated to be between 125 and 150 million yuan, with a year-on-year growth rate of 41.56%-69.87%.
Q4 High performance growth and rapid development of leading electrolytic copper foil equipment. On a quarterly basis, for 2023Q4, the company's net profit in a single quarter was about 124-164 million yuan, a year-on-year growth rate of about 187.51%-280.06%; net profit from a single Q4 deducted net income was about 0.777-102 million yuan, a year-on-year growth rate of about 180.74%-271.42%. The company's single Q4 performance grew rapidly, and the business situation was improving.
Demand in the electrolytic copper foil market is steady, and the company simultaneously lays out the two major trends of lightness and compounding.
① Demand for electrolytic copper foil terminals is steady, developing in the direction of lightness and thinness. Driven by factors such as the intelligence of electronic products and the development of 5G, demand for PCB copper foil is expected to grow steadily. According to GGII forecasts, global electronic circuit copper foil shipments will reach 823,000 tons in 2030, and the CAGR for 2021-2030 is 3.1%. For lithium battery copper foil, the thinner the thickness, the lighter the copper foil per unit area, and the higher the battery energy density. According to Jiangcopper copper foil, compared with 8 μm lithium copper foil, 6 μm and 4.5 μm copper foil can increase battery energy density by 5% and 9%, reduce the amount of copper used per battery, and also help reduce the cost of lithium batteries. Mainstream domestic battery manufacturers are switching to lighter and thinner lithium battery copper foil.
② Composite copper foil has obvious advantages and broad market space. Composite copper foil uses a “sandwich structure” with copper plating on both sides of the PET/PP film. It has the advantages of high safety, low cost, and high energy density, and is expected to replace traditional lithium electrolytic copper foil. At present, many companies are laying out composite copper foil, process maturity is rapidly improving, battery factory verification continues to advance, and the industry is ready to move forward. According to estimates, assuming that the industry penetration rate reaches 30% in 2025, the composite copper foil market space is about 31.4 billion yuan.
③ The company is a leader in electrolytic copper foil equipment, with two major trends: lightweight layout and compounding. I. The core equipment for lithium copper foil is a cathode roller. Hongtian Technology, a holding subsidiary of the company, has broken foreign monopolies. It has now successfully developed an oversized electrolytic copper foil cathode roller with a diameter of 1.82 meters, a foil maker and supporting equipment, which can stably produce high-end ultra-thin lithium copper foil; II. The company has developed a composite copper foil all-in-one machine, which has the advantages of high efficiency, automation, environmental friendliness and low site requirements. The company's vacuum magnetron sputtering all-in-one machine has passed experimental tests and is excellent in all indicators.
With the development of the composite fluid collector industry, the company's vacuum coating equipment business is expected to grow rapidly.
Profit forecast: Hongtian Technology, a holding subsidiary of the company, has localized high-end cathode rollers and has strong product competitiveness, which will benefit from increased industry demand; at the same time, the company lays out composite fluid collection drying equipment to open up room for long-term growth. We keep our profit forecast unchanged. We expect the company's revenue for 2023-2025 to be 2,792, 36.45, and 4.676 billion yuan, respectively, and net profit to mother of 2.03, 3.51, and 484 million yuan, respectively. The PE corresponding to the stock price on January 16, 2024 will be 26.5, 15.3, and 11.1 times, respectively, maintaining the “increase” rating.
Risk warning. The risk of declining demand for electrolytic copper foil; the risk of increased market competition; the risk of the composite collector industry progressing less than expected; the risk of uncertain technical routes for composite fluid collector equipment; the risk of deviations in market space estimation; the risk of untimely updates to the data quoted in the report, etc.