Event: the company publishes its semi-annual report for 2020. The company's 2020H1 realized revenue of 2.347 billion yuan, an increase of 4.19% over the same period last year, a net profit of 134 million yuan, an increase of 47.92% over the same period last year, and a net profit of 105 million yuan, an increase of 109.73% over the same period last year. The net cash flow generated by operating activities was 144 million yuan, up 18.29% from the same period last year. Of this total, Q2 realized revenue of 1.428 billion yuan, up 31.86% over the same period last year, realized net profit of 70 million yuan, up 31.42% over the same period last year, and realized net profit of 108 million yuan after deducting non-return, an increase of 535.29% over the same period last year.
Q2 revenue gradually recovered, electrode foil gross profit margin increased by 6.66 percentage points compared with the same period last year. 1) from the revenue side, the company's Q2 revenue increased by 31.86% compared with the same period last year, gradually recovering from the impact of the epidemic. Among them, trade increased to 355 million yuan from 187 million yuan in the same period last year, contributing to part of the revenue increase in the first half of the year. 2) on the profit side, the company's H1 return net profit increased by 47.92% compared with the same period last year, mainly due to the increase in investment income (up 96.36% from the same period last year to 95 million yuan): the company holds a 14.22% stake in Tianchi Energy. Benefiting from the rise in coal prices in Xinjiang and the increase in coal production of associated companies, Tianchi Energy made a net profit of about 630 million yuan in 2019, compared with about 568 million yuan in the first half of this year. 3) in terms of gross profit margin, high purity aluminum, electronic aluminum foil, alloy and aluminum products all increased slightly. Electrode foil products gross profit margin year-on-year growth 6.66pp, mainly due to electrode foil production cost reduction: fund-raising project "annual output of 15 million square meters of high-performance high-pressure corrosion foil project" gradually put into production, improving the link of raw material self-sufficiency, superimposed new investment production line technology is relatively more advanced, and then electrode foil product gross profit margin has been greatly increased. 3) in terms of profitability, the expense rate during the H1 period of the company decreased by 1.5pp to 11.38%. Among them, the R & D cost decreased from 0.38pp to 0.60%, because the company controlled the R & D input according to the project schedule, and the financial cost decreased by 0.66pp to 5.20%, which was due to the decrease in the company's short-term borrowing compared with the same period last year.
The import substitution space of high purity metal is huge, and the company is the only enterprise in China that has the production capacity of 5N (99.999%) and above ultra-high purity aluminum and high purification smelting and casting. At present, the target materials supplied by the company account for about 60% of the target materials for semiconductors and about 40% for display panels. It has been on the market since 2018, and a batch of stable supply has been formed in 2019, and the sales of 2020H1 high-purity aluminum new materials have maintained substantial growth.
Profit forecast and investment advice. We estimate that the return net profit of the company from 2020 to 2022 is 2.9,3.4 and 370 million yuan respectively, and the EPS is 0.28,0.33 and 0.36 yuan respectively, and the stock price is 20X, 17x and 16X corresponding to the stock price on August 17, 2020. Optimistic about the company's high-purity aluminum, electrode foil and other areas of application prospects, for the first time to cover the "hold" rating.
Risk tips: raw material price fluctuations, new business promotion is not as expected, investment income fluctuation risk.