Event
The company released its semi-annual report on August 25, 2020, with operating income of 573 million yuan in the first half of 2020, down 7.46% from the same period last year, and net profit of 91 million yuan, down 4.53% from the same period last year. The performance is in line with expectations.
Business analysis
The business of reflective materials is gradually recovering. License plate film and semi-finished products were affected by the late start of the license plate center and the downturn in the car market in the first quarter. With the effective control of the domestic epidemic situation in the second quarter, the company's license plate film and semi-finished products gradually recovered in April. In terms of products, the sales revenue of vehicle safety protection materials and products was 125 million yuan, an increase of 17.07% over the same period last year; the sales revenue of glass bead road safety protection materials and products was 61 million yuan, an increase of 15.75% over the same period last year; and the sales income of personal safety protection materials and products was 102 million yuan, down 4.37% from the same period last year. Since the two sessions, micro and nano prism reflective materials have benefited from the gradual recovery of infrastructure, with sales revenue of 111 million yuan, an increase of 15.72% over the same period last year.
Take Huawei New Materials as the center to develop optical display and electronic functional film materials. After customer adjustment and market expansion in 2019, the glossy film business has successfully entered the Hisense system and is actively expanding other well-known manufacturers. Quantum dot film actively expand the market application channels, and for downstream customers for small batch supply. From the revenue side, the company's sales revenue of backlight materials and die-cutting components for LCD was 117 million yuan, an increase of 15.78% over the same period last year.
Aluminum-plastic film and electronic packaging materials accelerate domestic substitution. The company's aluminum-plastic film business is mainly used for consumer electronics and power energy storage. In the future, the company will actively promote the landing of certified customer orders and promote the rapid development of aluminum-plastic film business. During the reporting period, the company's sales revenue of aluminum and plastic film was 22 million yuan, an increase of 4.93% over the same period last year. Consumer electronics packaging materials, the company's PC/PMMA composite film two production lines have completed installation and commissioning, the overall test situation is better than expected, has achieved small batch supply. In terms of products, the sales revenue of optoelectronic thin films / plates was 158 million yuan, an increase of 29.41 percent over the same period last year, and the sales revenue of high-performance release materials was 24 million yuan, an increase of 12.84 percent over the same period last year.
Profit forecast and investment suggestion
We estimate that the return net profit of the company from 2020 to 2022 is 250 million yuan, 350 million yuan and 430 million yuan respectively, and the EPS is 0.4,0.56 yuan and 0.69 yuan respectively. The current market capitalization corresponds to PE of 22.8,16.3 and 13.3, maintaining the "overweight" rating.
Risk hint
Downstream customer certification is not as expected, domestic substitution progress is not as expected, research and development is not as expected.