Summary of events: on January 26, the company disclosed its 2021 performance forecast that the company's net profit in 2021 reached RMB 2.18-222 million, an increase of 73.15%-76.33% over the same period last year, while the deduction of non-net profit was RMB 2.03-208 million, an increase of 106.80%-111.89% over the same period last year. Among them, the net profit of Q4 homing in 2021 reached 0.59-63 million yuan, an increase of 69.1 percent over the same period last year, a decrease of 12.8 percent over the previous year, and a deduction of non-net profit of 0.54-59 million yuan, an increase of 89 percent over the same period last year and a decrease of 13.5 percent and 20.8 percent over the same period last year.
Analysis and judgment:
The rise in volume and price has contributed to performance growth in 2021, and Q4 may be disturbed by seasonal cost increases. 1) Price:
The market demand of aluminum electrolytic capacitors downstream of electrode foil continues to be strong, especially in emerging markets, including new energy power generation, new energy vehicles and other rapid growth. Under the tight supply and demand, the company quickly raised product prices and improved the company's profitability. 2) production and marketing: benefiting from the company's IPO projects in all production by the end of 2020, the company achieved rapid production growth in 2021, while the company put its own funds into fixed-increase projects in advance, which further improved the company's production capacity; 3) cost: the company's foil production base is mainly distributed in Ya'an and Ningxia, Sichuan Province, we speculate that Q4 or by the dry season, electricity and other costs rise, leading to Q4 net profit seasonal decline compared with the previous year.
Global electrode foil leading enterprises, benefit from new energy, 5G and other development opportunities, continue to expand production under the future growth path is clear. The company currently has about 3000 million square meters of foil production capacity, the scale is in the forefront of the global industry.
We expect that the future demand for global foil will be mainly driven by emerging application fields (electric vehicles, charging piles, photovoltaic wind power, 5G, etc.). With the successful release of the company's fixed additional project in January 2021, it is expected that about 1570 square meters of foil capacity will be added (mainly used in 5G, new energy, automotive electronics and other fields), and the global market share is expected to further increase. And with the production of fixed-increase projects and change-raising projects in the next two years, the proportion of products in emerging application areas in the company's product structure may further increase. With the rapid growth of demand and higher gross profit margin in emerging areas, we believe that with the continuous expansion of production, the future growth path is clear and the performance is expected to be released at the same time.
Electrode foil industry to meet the inflection point of supply and demand, downstream aluminum electrolytic capacitors ushered in price adjustment, electrode foil price space opened, the current round of electrode foil price increase is expected to continue, the company's performance release is expected to accelerate. 1) the core of the current price increase in the electrode foil industry is driven by demand growth in downstream emerging applications, not just supply-side disturbances. On the supply side, the prices of aluminum and accessories, the main raw materials of electrode foil, are on the upside, while power cuts and rising electricity charges push up the cost of electrode foil to support the upward price; on the demand side, benefit from the inflection point of demand growth in emerging areas (new energy vehicles, new energy power generation, charging piles) in 2021, we judge that the industry as a whole will shift from a small surplus to tight supply and demand, and the supply and demand of electrode foil may continue to be tight in the future. 2) downstream capacitor factories have started a new round of price adjustment in October 21. For example, the prices of all products of Aihua Group have increased by 15-20%, Jianghai shares have increased by 10%, and the average price increase in the capacitor industry has increased by 10-20%. The price adjustment of aluminum electrolytic capacitor is beneficial to the price transmission of electrode foil, and the price increase space may be opened in the future.
Investment suggestion: we expect the company's 2021-2023 net profit forecast to be 2.22,3.40 and 419 million yuan, with the closing price on January 27, 2022 as the benchmark, corresponding to PE of 23x, 15x and 12x respectively, covering for the first time and giving the company a "recommended" rating.
Risk tips: demand is lower than expected, lithium prices have fallen sharply and their own projects are less than expected risks.