Matters:
The company's revenue for the first quarter of 2022 was 869 million, up 28.95% year on year, 115 million yuan, up 1.85% year on year, after deducting non-return net profit of 93 million yuan, up 11.62% year on year.
Comments:
Q1 Revenue growth is strong, and the industry remains booming. Revenue for the first quarter was 869 million, and the traditional off-season achieved a month-on-month increase for the first time. On the one hand, revenue growth was contributed by the rise in new production capacity. On the other hand, the company is actively developing new customers in industrial control and renewable energy. Downstream demand is strong, and production and sales are booming. Q1 The gross profit margin was 28.24%, a slight decrease from month to month. This was mainly due to the outstanding pressure on the cost side, an increase in the share of newly developed customers in the superposition of the company's product structure. The delay in price increases temporarily dragged down gross profit. From the cost side, the company continued to strengthen cost control. Sales and management expenses all declined significantly. Overall, profitability remained relatively stable, and non-net interest rates bucked the trend month-on-month.
Industrial control new energy has started a second growth curve, and the share of domestic manufacturers continues to rise. In the era of carbon neutrality, new energy sources ushered in a rapid explosion. The demand for photovoltaics, wind power, and new energy vehicles ushered in explosive growth. In 2021, the company increased the development of corresponding products and customers, and made positive progress with leading customers. Related revenue increased by more than 70%, becoming the company's main growth driving force. In the future, the company will continue to increase its industrial control new energy layout, actively develop new energy customers on the basis of maintaining its leading position in the consumer sector, and continuously improve its comprehensive scale and product capabilities. Judging from the global competitive landscape, the profits of established Japanese manufacturers are weak, and their market share continues to be encroached upon by domestic manufacturers. In particular, high-end automotive and industrial domestic manufacturers are progressing rapidly. As a leading domestic enterprise, Aihua's global share is expected to continue to rise.
Product price increases and aluminum foil production is actively expanding, and a recovery in gross margin can be expected. Affected by the rise in upstream raw materials and electricity prices in 2021, the cost of aluminum foil rose significantly, and the gross margin of the company's products declined. Recently, from industry tracking, overseas manufacturers have begun a new round of price increases. This is mainly due to strong demand for new energy from downstream industrial control, while the cost side continues to rise. We expect domestic manufacturers to gradually follow suit. Furthermore, due to the rapid expansion of aluminum electrolysis production capacity, the company's aluminum foil production capacity is tight in the short term. It is expected that with the launch of aluminum foil production capacity this year, the cost side is expected to gradually ease, and a gradual restoration of gross margin can be expected.
Profit forecast, valuation and investment suggestions: The aluminum electrolytic capacitor industry is benefiting from the rapid downstream explosion of new energy, compounded by the pressure of rising downstream costs. Currently, the industry is in a tight balance between supply and demand, and products are still in the channel of price increases. Considering that the company is still releasing new production capacity, the introduction of new products is being actively promoted. It is expected that as the self-sufficiency rate of aluminum foil increases, the company's gross margin will gradually recover. Considering the current cost side pressure and the company's layout in the field of industrial control and new energy, the company's 22-23 EPS forecast was adjusted from 1.53/1.63 to 1.5/1.88 yuan, and the 24-year EPS forecast was 2.1 yuan. Considering the company's leading position in the aluminum electrolytic capacitor industry and the downstream industrial control/new energy boom, referring to the valuation of Peer Sanhuan Group/Shunluo Electronics/Jianghai Co., Ltd., the company was given 25 times PE in '22. The corresponding target price was 37.5 yuan, maintaining the “recommended” rating.
Risk warning: Downstream applications fall short of expectations, capacity expansion falls short of expectations, industry competition intensifies, raw material prices fluctuate greatly, and new product development falls short of expectations.