Main points of investment:
Company announcement: 1) in the mid-year report of 2020, the income was 343 million yuan, down 1.84% from the same period last year, and the net profit was 53.05 million yuan, an increase of 2.9% over the same period last year, deducting 43.3 million yuan from non-parent net profit, down 11.4% from the same period last year, mainly due to government subsidies of 7.27 million yuan Of this total, Q2 revenue was 180 million yuan, down 10.8% from the same period last year, and the net profit was 25.9 million yuan, down 16.4% from the same period last year. It is expected that the export of Q2 is restricted mainly because of the serious overseas epidemic. 2) the company plans to change its name to Zhejiang Jinhai Hi-Tech Co., Ltd., at the same time, the business scope of new bio-based material technology research and development, Internet of things technology research and development, software development and so on.
Good cost control led to an increase in net profit margin by 0.7pct to 15.5 per cent. The company's gross profit margin rose slightly to 32.1% in the first half of the year; sales expenses fell 10.8% to 18.69 million yuan compared with the same period last year, mainly due to lower sales revenue, freight and other sales expenses; and management expenses fell 8.9% to 22.18 million yuan due to the optimization of the management system and the better effect of fee control. The company continues to invest in R & D and increase technical barriers. Research and development expenses increased by 22.6% to 8.64 million yuan in the first half of the year compared with the same period last year, mainly due to the company's need to increase investment in research and development of new materials, new products and new technologies. In the first half of the year, the company applied for 4 patents, including 2 invention patents and 3 authorized patents. At present, the company has launched a new type of household air conditioning filter, which has more than 99.8% killing effect on H1N1, H3N2, chicken coronavirus and so on. In addition, the company's net operating cash flow in the first half of the year increased by 56% to 100 million yuan compared with the same period last year, mainly due to the accelerated recovery of accounts receivable and the acceleration of inventory turnover.
The epidemic in the first half of the year has led to a strong demand for high-end filter materials in the market at home and abroad, and it is expected that the strong demand for filter materials in the market will continue for a long time in the future. especially in the large-scale and rapid development of automotive air filtration and household air conditioning filter. Relying on technology and brand advantages, the company will reach strategic cooperation with more downstream brand manufacturers to continue to develop innovative products that lead the industry. By opening the internal cycle of "market-R & D-production", the company accelerates the whole process from the discovery of market demand to the application of end products, and strengthens the company's competitiveness; at the same time, the company continues to expand the international market to promote the external cycle of "new products-new areas-new markets". 1) in terms of on-board air purification products, new energy and Japanese cars are the growth point. We believe that the market size of on-board air purifiers for new energy vehicles will exceed 1 billion yuan. 2) in the field of household air conditioning, under the assumption of pessimism / neutral / optimism, the update frequency of air conditioning filter is every five years / three years / two years respectively, and the renewal demand scale of air conditioning filter can reach 100 million yuan in 11-23-35, which has a huge market space.
The company locates the import substitution of high-performance filter materials, and GS AVF products begin to be produced. The company's high-performance filter materials are used in air conditioners, purifiers, all kinds of vehicles (cars, trains, airplanes, etc.), all kinds of public buildings and other scenes. in the future, it is expected to expand the application of aircraft cockpit air filtration system, electric vehicle air conditioning filtration system, integrated circuit clean room, enrich the company's product matrix, further improve technical barriers and enhance market competitiveness. The company's R & D team began to cooperate with Japanese laboratories in 2018, successfully launched "GOLDENSEA Anti-virus filter" technology (referred to as "GS AVF") in 2019, and continued to carry out technology iterations to meet the needs of the changing environment, and the new products began to apply this technology in 2020.
Maintain earnings forecasts and maintain overweight ratings. The company has been deeply ploughing the field of air control for many years, and is the leading enterprise of high-performance filter materials in China, and its products are widely used in the field of household appliances and vehicles. The company has a large number of high-quality customers such as Daijin, Sharp, LG, Fujitsu, Mitsubishi, Gree, etc., the customer structure is stable, and through continuous research and development of high-end products to enhance competitiveness.
It is estimated that the net profit of homing from 2020 to 2022 will be RMB 1.07 billion, corresponding to PE of RMB 168 million in 28-23-18, maintaining the "overweight" rating.