Event: on August 9, 2021, double Star New Materials released its semi-annual report of 2021. The company achieved a revenue of 2.641 billion yuan, an increase of 23.10% over the same period last year, and a net profit of 604 million yuan, up 160.28% over the same period last year.
Comments:
The profit margin hit a new high and the Q2 performance exceeded expectations. Through the continuous efforts of the "five major plates", the company's main business and operating performance continued to grow, with revenue of 1.36 billion yuan in the second quarter, + 16.4% year-on-year and + 6.09% compared with the same period last year. The company's net profit was 328 million yuan, + 126.93% compared with the same period last year, and + 18.6% compared with the previous year. The company's performance exceeded market expectations. At the same time, with the continued high level of downstream applications such as display devices, electronic components and photovoltaic, as well as the continuous increase in the proportion of high gross margin unitary products developed by the company and quality customers for the first time, the company's profit margin level also continues to grow, hitting another 10-year high, Q2 gross profit margin 34.70%, month-on-month + 2pct.
New materials account for nearly 70%, the company accelerates the transformation of high-end. At the same time, in the case of increased price volatility of packaging polyester films, the company accelerated the transformation of high-end, the share of revenue from new materials such as optical materials and new energy materials increased from 55% in 2020 to 67% in the first half of 2021, and the proportion of profits increased from 60% to 75%. Among them, optical material film, as the focus of the company's development, continues to maintain steady growth, with an income of 872 million yuan, an increase of 24.72% over the same period last year. In terms of new energy materials, under the high prosperity of the photovoltaic industry, the company gives priority to allocating production capacity to meet market demand. The business achieved revenue of 563 million yuan, an increase of 112.75% over the same period last year. In addition, variable information materials and heat shrinkable materials have also increased considerably. With the continuous optimization of the company's product structure, vertically integrated industrial layout, and rich product matrix, the company's long-term growth space has been opened.
The expansion of key customers is smooth, and the new production capacity is easily digested. With the release of production capacity of 200 million square meters of optical film project in the second half of the year, the company will comprehensively transform into high-end, and the proportion of high-end film performance will continue to increase in the second half of the year. At the same time, the company's optical film new customers were introduced smoothly. 1) the company introduced Hisense in the first half of the year, and its share in the second half is expected to continue to increase; 2) in June, the company won a large order of Kangguan optical film, the fifth largest TV ODM factory in the world, accounting for 60% of its tender share; 3) the company will continue to increase its cooperation with Samsung and other old customers, and its share is expected to continue to increase.
Profit forecast and investment rating: benefiting from the pick-up of terminal demand and the acceleration of domestic substitution, the domestic optical film industry ushered in a period of opportunity. Double Star New Materials, as a leading manufacturer, is expected to fully enjoy the industry dividend. We raise our performance forecast and expect the company's net profit for 21-22-23 to be 1.897 billion yuan respectively, which is twice as much as that of PE in 17-13-10. We are optimistic about the company's leading position in the domestic optical film industry, and the company deeply benefits from the increase in volume and price brought about by the improvement of the industry boom and its own capacity expansion, and the company's performance is expected to explode.
We maintain a "buy" rating on the company with a target market capitalization of 35 billion yuan.
Risk factors: the epidemic situation is repeated and the downstream demand is lower than expected.