\u3000\u3000 Nantong Haixing Electronics Co.Ltd(603115) (603115)
Event overview: on January 26, the company disclosed the performance forecast for 2021. In 2021, the net profit attributable to the parent company reached 218-222 million yuan, a year-on-year increase of 73.15% – 76.33%, and the net profit deducted from non net profit was 203-208 million yuan, a year-on-year increase of 106.80% – 111.89%. Among them, the net profit attributable to the parent company in Q4 in 2021 was 59-63 million yuan, a year-on-year increase of 69.1% – 80.5%, a month on month decrease of 12.8% – 18.4%, and the net profit deducted from non net profit was 54-59 million yuan, a year-on-year increase of 89% – 106.4% and a month on month decrease of 13.5% – 20.8%.
Analysis and judgment:
The simultaneous rise of volume and price will boost the performance growth in 2021, and Q4 may be disturbed by the rise of seasonal costs. 1) Price: the market demand for aluminum electrolytic capacitors downstream of electrode foil continues to be strong, especially in emerging markets, including new energy power generation and new energy vehicles. Under the tight supply and demand, the company quickly raised the product price and improved the profitability of the company. 2) Production and marketing: benefiting from the company’s IPO projects reaching full capacity at the end of 2020, the company achieved rapid growth in output in 2021. At the same time, the company invested in fixed growth projects with its own funds in advance, further improving the company’s production capacity; 3) Cost: the company’s chemical foil production base is mainly located in Ya’an, Sichuan and Ningxia. We speculate that Q4 may be affected by the dry season, and the cost of electricity will rise, resulting in a seasonal decline in Q4 net profit.
The world’s leading enterprises in electrode foil have benefited from the development opportunities of new energy and 5g, and the future growth path is clear under the continuous expansion of production. At present, the company has a capacity of about 30 million square meters of foil, and its scale ranks in the forefront of the global industry. We expect that the future demand for global foil forming will be mainly driven by emerging application fields (electric vehicles, charging piles, photovoltaic wind power, 5g, etc.). With the successful issuance of the company’s fixed increase project in January 2021, it is expected to add about 15.7 million square meters of foil forming capacity (mainly used in 5g, new energy, automotive electronics and other fields), and the global market share is expected to further increase. In the next two years, with the production of fixed increase projects and change fund-raising projects, the proportion of products in emerging application fields in the company’s product structure may further increase. The demand in emerging areas is growing rapidly and the gross profit margin of products is higher. We believe that with the continuous expansion of production, the company will have a clear growth path in the future and its performance is expected to be released simultaneously.
The electrode foil industry welcomes the inflection point of supply and demand, the downstream aluminum electrolytic capacitor ushers in price adjustment, and the space for electrode foil price increase is opened. This round of electrode foil price increase may be expected to continue, and the release of the company’s performance is expected to accelerate. 1) The core of this round of price rise in the electrode foil industry is driven by the demand growth of emerging application fields in the downstream, not just the disturbance on the supply side. On the supply side, the price of aluminum and auxiliary materials, the main raw material of electrode foil, rose, while power rationing and rising electricity charges pushed up the cost of electrode foil and supported the price rise; On the demand side, benefiting from the inflection point of demand growth in emerging fields (new energy vehicles, new energy power generation and charging piles) in 2021, we judge that the industry as a whole will shift from slight surplus to tight supply and demand, and the supply and demand of electrode foil may continue to be tight in the future. 2) The downstream capacitor factory has started a new round of price adjustment in October 21. For example, the price of Hunan Aihua Group Co.Ltd(603989) whole line products has increased by 15-20%, the price of Nantong Jianghai Capacitor Co.Ltd(002484) has increased by 10%, and the average price increase of the capacitor industry is 10-20%. The price adjustment of aluminum electrolytic capacitor is conducive to the conduction of electrode foil price increase, and the price increase space may be opened in the future.
Investment suggestion: we predict that the net profit attributable to the parent company from 2021 to 2023 will be RMB 222 million, 340 million and 419 million. Based on the closing price on January 27, 2022, the corresponding PE will be 23x, 15x and 12x respectively. The company will be given a “recommended” rating for the first time.
Risk tip: the demand is less than expected, the lithium price has fallen sharply and its own project is less than expected.
