Event
The company released a semi-annual report that 2020H1 realized revenue of 2.521 billion yuan, down 1.73% from the same period last year; realized net profit of 87 million yuan, an increase of 72.32% over the same period last year; and increased by 119.12% to 92 million yuan after deducting non-profit. Q2 revenue increased 34.03% year-on-year to 1.535 billion yuan, net profit increased 139.44% to 74 million yuan, after deducting non-year-on-year increase of 182.83% to 71 million yuan.
Comments:
The performance exceeded expectations, and the profitability of the two-piece cans was significantly repaired upward. ① revenue side: split products, 2020H1 printed iron business revenue fell 26.6% year-on-year to 356 million yuan, can business growth, revenue increased 4.25% year-on-year to 2.161 billion yuan. The company's revenue accelerated significantly in the second quarter, which is expected to be mainly due to a substantial increase in beer canning rate under the catalysis of the epidemic. From the perspective of profitability, the company's 2020H1 gross profit margin was 15.3%, an increase of 2.4pct over the same period last year, in which the gross profit margin of the can / printing business changed from + 2.83pct/-1.39pct to 15.95% to 15.95% and 10.71% respectively, benefiting from the orderly landing of the price increase of two cans since 1919-the price of raw materials fell in the first half of the year, and the gross profit margin of the can business increased sharply compared with the same period last year. During the period of the company, the expense rate was 9.1%, which decreased by 0.3pct compared with the same period last year, and the sales / management / R & D / financial expense rate changed by + 0.09/+0.05/+0.81/-1.29pct respectively compared with the same period last year. Overall, the company's net interest rate in the first half of the year increased to 3.4% 1.4pct compared with the same period last year.
The prosperity of the two-piece can industry rebounded & the company's production capacity expansion, performance growth momentum. Thanks to the epitaxial M & An integration of industry leaders and the withdrawal of foreign capital in recent years, the market concentration of two-piece cans has been greatly improved. Since 2019, the price increase of two-piece cans has landed in an orderly manner, and profitability has ushered in an upward repair period. We expect that although the epidemic has disturbed the pace of price increases this year, there is still room for further price increases in the future.
In addition, the company expects to add more than 2 billion cans in the next two years, and is expected to enjoy the price increase of two cans & the double flexibility of capacity expansion, ushering in the Davis double-click of increased earnings and valuation.
Profit forecast and investment suggestion: according to the profit forecast and target price raised in the report, it is estimated that the EPS in 2020-2022 will be 0.28,0.40,0.50 yuan respectively (not considering the impact of fixed increase on profit for the time being), corresponding to a PE of 27.38 shock 18.83 shock 14.98X, maintaining the buy rating.
Risk tips: raw material prices fluctuate, downstream demand is lower than expected, and price increases are not as expected.