Net profit returned to the mother in 2020 reversed a year-on-year loss and maintained an increase in holdings rating
On April 22, the company released its annual report. It achieved operating income of 670 million yuan in 2020, +60.11% year on year; Guimu's net profit was 23 million yuan, reversing losses year on year (19 to 59 million yuan), lower than our previous expectations (64 million yuan in 2020); the year-on-year increase in the company's performance was mainly due to a year-on-year increase in sales of major products. We expect the company's EPS to be 0.10/0.11/0.13 yuan in 21-23 (previous value of 0.20/0.41/-yuan), increasing its holdings rating.
Sales of major products increased year-on-year, photovoltaic applications and semiconductor materials were significantly released. In 20 years, the company actively promoted market development for related products to help domestic substitution. Sales of major products increased year-on-year. Sales of infrared grade germanium products/photovoltaic grade germanium products/compound semiconductor materials/material grade germanium products/fiber-grade germanium products rose 38.45%/279.84%/108.23%/5.57%/15.22% respectively. Photovoltaic applications and semiconductor materials were released significantly. During the same period, due to the year-on-year decline in germanium prices, the prices of the company's germanium material/fiber-grade germanium products fell 11.88%/19.62%, respectively; due to increased sales of low-end LED grade gallium arsenide wafers, the price of compound semiconductor material products fell 22.09% year-on-year. The negative impact of falling prices was offset by higher sales volume, and revenue increased by +60.11% year on year.
Unit sales costs fell year on year, and the company's performance reversed losses year on year
Due to the high year-on-year increase in sales of major products, the company's costs rose year on year, but the increase in sales led to a year-on-year decline in the company's unit sales cost (the reduction in unit sales costs reduced by a total of 77 million yuan). The increase in company costs was less than the increase in revenue, and the company's overall gross margin increased 1.79 pct to 17.79%.
In addition, the company's asset impairment losses in 2020 fell by 11 million yuan year-on-year, a decrease of 82.29%, mainly because the cost of some products fell this year, while market prices at the end of the year rose compared to the end of the previous year. The estimated recoverable amount of inventory was tested at the end of the year. Prices charged at the end of the year were prepared to decline, increasing the performance of some companies.
Lower the semiconductor material production, sales and gross margin assumptions, and maintain the increase in holdings rating. Based on the company's 20-year revenue cost, production and sales performance, and the 21-year production and operation plan, we mainly lower the semiconductor material production, sales and gross margin assumptions. We expect net profit to the mother for 21-23 to be 0.66/0.74/84 million yuan (previous value of 1.3/27-100 million yuan). Given that the price of germanium ingots has risen to the 12Q1 and 17Q1 levels, it is still at a low level of nearly a decade. The low PB values for two-stage companies are 3.37 and 5.26, and the average PB value for the past ten years is 5.42; we maintain the PB valuation of germanium resources at 3X. We expect the company's BPS to be 2.33 yuan in '21, corresponding to a market capitalization of 4,565 billion yuan. The corresponding net profit of germanium components and semiconductor materials in '21 was 0.56/08 billion. Based on the comparable company's 21-year Wind PE valuation of 36.4/73.7X, the corresponding market capitalization of 2,631 billion yuan, the total market value was 7.196 billion yuan, and the corresponding target price was 11.02 yuan (previous value of 16.54 yuan), maintaining the stock increase rating.
Risk warning: downstream demand falls short of expectations, company product sales fall short of expectations, etc.
