Event: the company released its semi-annual report of 2022, with revenue of 2.053 billion yuan in the first half of the year, an increase of 2.25% over the same period last year, a net profit of 203 million yuan, an increase of 0.81% over the same period last year, and a deduction of 180 million yuan in non-net profit, down 4.87% from the same period last year.
22H1 overcame the impact of the epidemic and improved steadily, and the rate of expenses decreased significantly compared with the same period last year. 1) profit indicators remain high: it is expected that the company's shipments will be under pressure in the short term under the influence of the Q1 Spring Festival + Q2 epidemic, but the company's revenue / return net profit will increase steadily compared with the same period last year, with an overall gross profit margin of 23.52% / 9.89%, a slight decrease of 0.77pct / 0.15pct respectively. 2) operating cash flow has improved significantly: the net operating cash flow of 22H1 is 241 million yuan, which is still 262% higher than that of the same period last year after deducting 179 million yuan from taxes and fees. 3) the expenses decreased significantly: the rates of sales, management and financial expenses were 0.68%, 3.28% and 3.75% respectively, which decreased by 0.15pct, 0.73pct and 1.18pct respectively compared with the same period last year. The financial expense rate decreased most significantly, mainly due to the continuous optimization of the company's asset-liability ratio, which fell by 8.85pct to 47.06% compared with the same period last year.
Capacity expansion is steadily advancing to seize the incremental market and deeply bind equipment manufacturers. 1) steady pace of capacity expansion: the company has formed 50,000 tons / year in Qinghai + 20,000 tons / year in Huizhou with a total capacity of 70,000 tons / year; the first phase of Hubei Huangshi base is expected to be put into production before June 2023; Jiangxi Guixi base is expected to put into production of 20,000 tons / year in 2023 and 30,000 tons / year in 2024, when the company will form 170,000 tons / annual capacity and another 100,000 tons / annual capacity is in the planning stage. 2) Strategic cooperation + shareholding to ensure the demand for production expansion equipment: global lithium copper foil manufacturers have increased production expansion efforts, foreign / domestic equipment manufacturers have scheduled production to 2026, 2024, the equipment side has become the main constraint to capacity release. The company signed a strategic framework agreement with Dawson in July and announced in August that it intends to acquire a 5% stake in the other side, which will give priority to meeting the company's production expansion equipment needs and help the company release production capacity.
The company takes the lead in research and development, and the proportion of high-end products increases or leads to the improvement of profitability. Under the demand of reducing cost and weight of lithium battery, thinning and composite copper foil is the main evolution direction of the industry. 1) thinning direction: at present, the mainstream product specification of lithium copper foil industry is 6 microns, and the company's 4.5 micron and 4 micron products have been mass produced and gradually increased the proportion of products. Open 3 micron product research and development; 2) Composite direction: composite copper foil is in the early stage of mass production, the company has jointly carried out technical research and development of composite copper foil products with Dawson shares. The increase in the proportion of high-end products is expected to help support the company's high profitability.
Profit forecast and investment advice: taking into account the company's capacity expansion + high-end share increase, it is estimated that the 2022max 2023max 2024 homing net profit of 8.4x118,16.2 billion yuan, the first time to cover the "overweight" rating.
Risk tips: downstream demand is lower than expected, product prices fluctuate, and projects under construction are not as expected.