Incident: On August 4, the company published its semi-annual report. Revenue for the first half of the year was 1,993 million yuan, up 119% year on year; Guimu's net profit was 220 million yuan, up 229% year on year. The performance was in line with expectations.
New production capacity was gradually released, and the capacity utilization rate was full: due to the new production capacity put into operation (N4 plant), the company's production capacity and revenue scale expanded at the same time, and industry sentiment was high (downstream PCB production expansion, upstream raw material prices increased), and product prices and capacity utilization remained at a high level. Benefiting from the above factors, the company's performance in the first half of the year was impressive and improved quarter by quarter. Q2 achieved revenue of 1,161 million yuan in a single quarter, up 147.64% year on year and 39.57% month on month; Guimu's net profit increased 311.49% year on year, up 85.73% month on month. The gross margin for the first half of the year was 19.36% and the net interest rate was 11.05%, all of which reached record highs.
High-frequency high-speed CCL is expected to be gradually released, and product upgrades will increase new momentum for performance growth: According to the company announcement, in the high-speed field, the company's VLL, ULL1, ULL2, and ELL grade products have all passed brand customer certification. They are currently one of the few domestic CCL enterprises that have passed certification from major customers for various media loss levels. Some products have already been mass-produced. In the high-frequency field, the company has further improved its hydrocarbon and PTFE series products, and most products have been supplied in small batches. In addition, the company has a layout in automotive electronics, IC packaging materials, and high thermal conductivity materials, etc., and some products have been tested on a small scale.
Actively promote the localization of upstream materials while implementing a development strategy for large customers: in order to ensure supply chain safety, the company has stepped up the evaluation and testing of domestic materials, focusing on promoting the localization of raw materials for high-end high-frequency high-speed materials. The company is actively expanding large customers and has established good cooperative relationships with outstanding PCB companies such as Jianding Technology, Oshikang, Jingwang Electronics, Shennan Circuit, Hanyu Bode, Shengyi Electronics, Fangzheng Technology, Shanghai Electric Co., Ltd., Shenghong Technology, and Guangdong Junya.
Investment suggestions: We expect the company's revenue from 2021 to 2023 to be 4.157 billion yuan (+96%), 5.196 billion yuan (+25%), 6.131 billion yuan (+18%), and net profit of 441 million yuan (+225%), 577 million yuan (+31%), and 658 million yuan (+14%) respectively. The corresponding EPS is 1.79 yuan, 2.35 yuan, and 2.68 yuan respectively. The corresponding PE is 26 times, 20 times, 17 times, and the target price is 54.05 yuan, respectively. First coverage, giving a “buy-A” investment rating.
Risk warning: Production expansion falls short of expectations; industry sentiment is declining; certification of new products falls short of expectations.