Core views

The performance of Chujiang New Materials is expected to increase. The net profit for 2023 is expected to be 50,000-550 million yuan, an increase of 274.06%-311.47% over the previous year. Among them, the performance increase in the second half of the year was significant. As the basic market of the company, the copper processing business grew steadily, while the market gradually picked up and profitability recovered. The military carbon materials sector is growing well. The subsidiary Hunan Dingli Technology Co., Ltd. increased rapidly with the completion and commissioning of the tantalum carbide project; Tiantao Hi-Tech's performance was steadily released, the subsidiary Wuhu Tianniao carbon composite production capacity was released, orders were sufficient, and samples of carbon ceramic brake discs were delivered, which is expected to contribute to performance and open up a new performance growth pole in 2024.

occurrences

Profit is expected to continue to grow throughout the year, with a significant increase in performance in the second half of the year

On January 24, 2024, Chujiang New Materials released the 2023 annual results forecast, according to which the company's net profit in 2023 was 50,000-550 million yuan, up 274.06%-311.47% year on year; net profit after deducting non-net profit was 38-430 million yuan, up 698.56%-777.31% year on year; basic earnings per share were 0.37 yuan/share - 0.41 yuan/share.

Brief review

The annual performance growth rate was impressive, and the performance in the second half of the year was excellent

According to the company's semi-annual report and full-year performance forecast, the company's net profit for the second half of the year is expected to be 377-427 million yuan, up 76.99%-100.47%; net profit after deducted non-net profit is 3.7-420 million yuan, up 34455.1%-3911.6% month-on-month. The net profit after deducting non-net profit for the same period last year is -244 million yuan, with a significant month-on-month increase in the second half of the year.

Copper processing business production capacity is steadily expanding, and performance is recovering and developing steadily

In 2022, due to factors such as the macroeconomic environment at home and abroad, falling copper prices, and weak consumer markets, market profit margins were compressed, and the performance of the metal materials sector declined slightly year-on-year. In the first half of 2023, the revenue of copper-based materials was 20.671 billion yuan (+4.89%), with a gross profit margin of 2.87% (-1.56pct). The business scale of copper-based materials continued to grow, the market share further increased, and the market gradually picked up. The company's profitability further recovered throughout 2023, and the overall copper processing business maintained steady development.

The company's advanced copper-based materials sector uses a profit model that combines the efficiency of recycled raw materials, cost efficiency of scale and product characteristics, and adheres to the operating standard of “100% capacity utilization, 100% production and marketing rate, 100% capital return rate, simultaneous growth in efficiency and scale”, creating a continuous cost leading edge, leading the industry in comprehensive cost performance. In the first half of 2023, the company achieved sales volume of 443,200 tons of copper-based materials, and plans to achieve a scale of more than 1 million tons by the end of the 14th Five-Year Plan, including more than 400,000 tons of precision copper strips, 500,000 tons of copper conductor materials, and about 100,000 tons of copper alloy wires.

Tianniao Hi-Tech's fund-raising projects are gradually being scaled up, and Wuhu Tianniao carbon composites steadily contributed to the performance in 2023, Tianniao Hi-Tech focused on promoting the quality and release of carbon fiber prefabs in aerospace, defense, and military industries, and further strengthening the expansion of the civilian product market. At the same time, it also promoted the release of Wuhu Tianyao thermal field composites and the development and mass production of carbon/ceramic brake disc products. Tianniao high-tech carbon fiber preforms are used for both military and civilian use, leading in technical level and market position. Wuhu Tianniao Phase I's production capacity of 400-ton photovoltaic thermal field carbon/carbon composites and 20,000 carbon-ceramic brake discs was completed and put into operation at the end of 2022. The volume was steadily increased during 2023, achieving operating revenue of 10.231,000 yuan in the first half of the year; samples of carbon ceramic brake discs have been delivered in 2023, which is expected to drive the carbon-carbon composites business to open up new incremental markets.

Dingli Technology's high-end thermal equipment business is growing well. At the same time, Dingli Technology is mainly engaged in high-end thermal equipment, and has relied on its own equipment and technical advantages to expand the new material sector business and develop businesses such as high-purity graphite/high-purity carbon materials and metal-based 3D printing materials. Among them, high-purity carbon powder has been produced in small batches. At the same time, with the batch delivery of 3D printing structural parts, the tantalum carbide coating project was completed and put into operation. In the first half of 2023, Dingli Technology achieved operating revenue of 240 million yuan (+44.99%), a net profit of 240 million yuan (+44.99%). 41.8565 million yuan (+114.93%). On December 20, 2023, Dingli Technology was officially listed on the New Third Board. The company holds 66.72% of Dingli Technology's shares, and the National Industrial Investment Fund is the second largest shareholder, holding 6.07% of the shares.

Profit forecast: We expect the company's revenue for 2023-2025 to be 463.2/526.6/59.07 billion yuan, respectively, with a growth rate of 14.1%/13.7%/12.2%, and the company's net profit to mother of 5.4/7.1/940 million yuan, respectively, with a growth rate of 302.3%/32.2%/32.6%. The corresponding PE is 17/13/10 times, respectively, giving a purchase rating.

Risk warning: The company's copper processing business contributes a lot of revenue and profit. The gross margin level of copper processing is low and affected by copper prices. If copper prices fluctuate rapidly, the profitability of copper processing may fluctuate due to the addition or depreciation of raw material inventory; downstream consumption of copper processing is scattered and affected by macroeconomics. If the economy weakens, or affects product orders, which in turn affects the company's performance; the share of recycled materials in the company's copper processing raw materials is relatively high. The price of raw materials is affected by the waste supply. If the waste supply is tight, the scrap price gap narrows or affects the company's profitability; Expansion of copper processing capacity and production capacity of carbon-carbon materials Expansion. If production capacity expansion falls short of expectations, performance may be affected.