Copper Crown copper foil (301217)
Tongguan copper foil is a mainstream copper foil manufacturer in China. Standard foil and lithium battery copper foil business drive the development of the company. In 2020, the output of copper foil will be 36000 tons, including 28000 tons of PCB copper foil and 8000 tons of lithium battery copper foil, ranking first and fifth among Chinese manufacturers respectively. Benefiting from the high prosperity of the copper foil industry, the company has excellent performance. In the first three quarters of 2021, the company achieved a revenue of 3.071 billion yuan and a net profit attributable to the parent of 284 million yuan. It is expected to achieve a revenue of 3.965 billion yuan and a net profit attributable to the parent of 349 million yuan in the whole year.
The optimization of product structure superimposes the mismatch between supply and demand in the industry, and the company enjoys the dividend of both volume and price.
In terms of revenue, the revenue of lithium battery copper foil increased rapidly, and PCB copper foil accounted for 66%, which is still the main source of revenue; In terms of sales volume, at present, PCB copper foil is mainly hte, hte-w and RTF, and lithium battery copper foil is 8 μ M and 6 μ M mainly, and 6 μ The proportion of M is increasing. In terms of profit, the single ton gross profit and processing cost of high-performance standard foil and extremely thin copper foil are higher, and standard foil and 8 μ m、6 μ The processing cost of M copper foil is RMB 2.62/2.56/35000/ton respectively. Affected by the company’s current product structure, the profit margin is temporarily lower than that of its peers. With the continuous optimization of the company’s product structure and the increasing proportion of high-end copper foil products, the company’s profit margin will continue to improve.
Alpha of Copper Crown and copper foil: close to the place of material procurement, low transportation cost, high material turnover rate and reduced capital consumption; The yield rate of PCB products is leading in the industry, and the yield rate of lithium battery copper foil is expected to increase rapidly; Bind Byd Company Limited(002594) , Shengyi and other major customers, with abundant orders; The high-end capacity continues to be released, with an existing capacity of 45000 tons / year. The standard foil capacity is expected to increase by 10000 tons in 2022. The 10000 ton project raised by the company aims at high-performance standard foil, which will improve the company’s product structure and further consolidate the company’s advantages in the field of standard foil.
The demand for new energy vehicles and 5g communication is strong, and the copper foil industry is booming.
The upgrading of downstream industries stimulates the demand for domestic high-performance PCB copper foil. In 2020, the global PCB copper foil shipment increased to 510000 tons. China’s high-end copper foil depends on imports, and there is a wide space for domestic substitution of high-performance copper foil. Taking advantage of new energy, the incremental market space of lithium battery copper foil is large, and the thinning of lithium battery copper foil is the general trend. The company focuses on layout 6 μ Copper foil products below M.
Investment suggestions:
We expect the company to realize a net profit of 350 / 515 / 606 million yuan from 2021 to 2023, with a year-on-year growth rate of 388.2% / 47.1% / 17.6% respectively, and the corresponding PE is 39x / 26x / 22x, giving a “buy” rating.
Risk tips:
The company’s capacity release was less than expected, the optimization of product structure was less than expected, the industry competition led to a sharp decline in copper foil processing fees, and new technologies such as pet replaced copper foil.
