Incidents:
On August 24, 2023, the company released its semi-annual report for 2023. In the first half of the year, the company achieved operating income of 3,507 million yuan, -4.62% year on year, realized net profit of 66 million yuan, -12.26% year on year, and achieved net profit of 58 million yuan after deducting non-attributable net profit of 58 million yuan, or -18.43% year on year.
First-half results are under short-term pressure
In the first half of 2023, the company's copper strip products achieved revenue of 3,348 billion yuan, -6.46% year on year, sales volume of 53,700 tons, -0.76% year on year, and revenue per tonne, cost/gross profit of 623/598/0.25 million yuan/ton, respectively, a year-on-year change of -5.74%/-5.91%/-1.71%. The company's copper strip products use the “raw material price+processing fee” pricing model. The decline in revenue is mainly due to a decrease in the cost per ton of the product and the gross profit per ton of the product. The company's cost rate for the first half of the year was 2.12%, +0.61 pct year on year, of which the R&D cost rate was 1.13%, +0.46 pct year on year, mainly due to the company's increase in R&D investment.
Strong downstream demand lays a solid foundation for battery tray discharge
According to data from the Passenger Transport Association, the domestic passenger car wholesale sales volume from January to July 2023 was 4.279 million units, +41.2% year-on-year. The domestic NEV market maintained a rapid growth trend. The company expands the NEV power battery tray business and provides supporting services for Chery and Nacha. In the first half of the year, the company sold 13,462 power battery trays. With the expansion of the company's battery tray production capacity and the further expansion of new customers, the battery tray business is expected to add new momentum to the growth of the company's performance.
Multiple businesses are promoted together, and the product structure continues to be optimized
In terms of the new materials business, the company will continue to renovate and upgrade the existing copper strip production line, comprehensively promote the construction of new projects for its subsidiary Yongjie Copper, actively promote the release of production capacity for rolled copper foil, and optimize the product structure by introducing high-value-added products. In terms of the new energy business, the company continues to develop new customers for battery trays, promote the construction of battery aluminum foil projects, and expand related business in the field of energy storage. In terms of auxiliary business, the subsidiary Harbin Shipbuilding New Materials began trial production in 23Q2. As the company's various businesses advance comprehensively, the company's product structure is expected to continue to be optimized.
Profit Forecasts, Valuations, and Ratings
We lowered the company's operating income for 2023-2025 to 84.53/101.33/11.398 billion yuan, the year-on-year growth rate was 18.57%/19.87%/12.49%, the three-year CAGR was 16.93%, the three-year CAGR was 16.93%, the net profit was 1.91/2.86/370 million yuan, respectively, the year-on-year growth rate was 36.17%/49.46%/29.60%, and EPS was 0.78/1.17/1.52 yuan/share. The corresponding PE was 14.2/9.5/ 7.3 times Referring to comparable companies, we gave the company 23 times PE and a target price of 15.60 yuan, maintaining the “buy” rating.
Risk warning: customer expansion falls short of expectations, risk of fluctuations in raw material prices, increased risk of industry competition