Incident: The company released its 2022 mid-year report. During the reporting period, it achieved operating income of 544 million yuan, down 9.0% from the previous year, and Guimu's net profit of 80.51 million yuan, down 12.2% from the previous year, after deducting non-net profit of 67.3 million yuan, a year-on-year decrease of 23.2%. Among them, the second quarter achieved revenue of 260 million yuan in a single quarter, a year-on-year decrease of 18.8%, and Guimu's net profit of 45.16 million yuan, a year-on-year increase of 27.8%.
The performance of the first half of the year was under short-term pressure due to weak terminal demand and rising raw material prices. During the reporting period, in the face of difficulties such as the sharp rise in raw material prices, the repeated impact of the epidemic on the supply chain, and the contraction in demand in the consumer electronics industry, the company actively adapted to market changes, took the initiative, and operated steadily. In the first half of 2022, global TV shipments fell 6.6% year on year, China's smartphone shipments fell 14.4% year on year, and China's tablet shipments increased 8.2% year on year. Affected by shrinking demand in the consumer electronics industry, the company's reflective film sales revenue declined year-on-year. Affected by the sharp rise in crude oil prices, PET prices, the company's main raw material, rose 25% year on year, product price adjustment lagged behind, and the comprehensive gross margin fell 5 pct to 28.28% year on year.
Prices of core products have increased and raw material costs have declined, and performance in the second half of the year is expected to improve. Since the third quarter, the impact of the epidemic has gradually abated, helping terminal demand to gradually recover, and crude oil prices have continued to fall. Currently, the PET market price has dropped by about 18% from its second-quarter high. Currently, it is still in a downward channel. Prices of the company's products have been raised smoothly in the third quarter, and profitability is expected to continue to increase. The company is the world leader in reflective films, with a global market share of more than 50%. Continuing to cultivate the industry, the market share will continue to increase. The commercialization process of miniLED TVs was accelerated in 2021, and the company's high-value-added miniLED reflective film was released rapidly. As the world's largest supplier, it will fully benefit from the release of miniLED products. The company currently has an optical base film production capacity of 25,000 tons/year, and plans to build a new high-end optical substrate with a production capacity of 80,000 tons/year. The volume is expected to gradually increase in 2023.
Continuously strengthen technology and equipment development capabilities and expand new high-end membrane material products. The company has strong technical strength, can develop equipment independently, and has the advantages of short commissioning cycle, large production capacity of individual equipment, and low capital expenditure. The reinforced PET white film developed by the company can replace the fluorine film (PVDF) in the photovoltaic backboard. Samples have been sent for testing, and batch delivery is expected next year. The company has entered the lithium battery diaphragm field. It is expected that dry diaphragms will be certified by the end of August, and wet diaphragms will be certified in December. A new production capacity of 560 million square meters/year will be built, and production is expected to be put into operation in mid-2023. The company continues to develop and reserve new high-end membrane material products, and builds 30 million square meters of new release film for semiconductor packaging. It is expected to be completed and put into operation by the end of this year. It has completed the development and verification of projects such as CPI films and TPU films, and completed the establishment of projects such as LCP materials and functional films for polarizers.
Give an “increase in holdings” investment rating. From 2022 to 2024, the company's net profit is expected to be 221 million, 309 million yuan, and 435 million yuan (equity incentive 2022 performance assessment trigger value of 215 million yuan), and EPS is 0.77, 1.08, and 1.53 yuan respectively. The current stock price corresponding to PE is 24, 17, and 12 times, respectively, giving an “increase in weight” rating.
Risk warning: rising raw material prices, new project construction falling short of expectations, new product releases falling short of expectations
Today, after hitting the high near 24,000 in the early session and entering bearish positions, the index fell sharply by nearly over 600 points, immediately recouping yesterday's losses significantly.
Moreover, today it broke the new high again, reaching a maximum of 24,076, but by the end of the market, it fell back by about 70 points, producing a bearish candle. The current trend has not yet been broken, but from the previous low until now, it has risen close to 6,000 points. It is believed that those with positions can continue to hold until there is a clear trend reversal for profit-taking. Those without positions can wait for a pullback to get in. Actually, it is hoped for a quick pullback, as it allows for entry and also provides a healthy breath.
Currently, the outlook remains the same as before. It is believed that even if there is a pullback, it shouldn't be too deep. However, if Futures fail to stabilize and close below 22,350, there may still be room for decline. The chance of Futures falling below 21,400 in the short term should be low, so it is considered that if a significant pullback occurs, it presents a good opportunity to incrementally go long. Recently, there has been a consistent approach to not hold positions overnight, only focusing on immediate trades, as there is no high chasing and no casual short selling.
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