\u3000\u3 Jointo Energy Investment Co.Ltd.Hebei(000600) 552 Triumph Science & Technology Co.Ltd(600552) )
Event:
The company released its annual report for 2021, and achieved an operating revenue of 6.324 billion yuan, an increase of 24.79% at the same time; The net profit attributable to the parent company was 157 million yuan, an increase of 30.35% at the same time; Deduct the net profit not attributable to the parent company of 62 million yuan, an increase of 106138% at the same time. In the fourth quarter alone, the company’s revenue was 1.48 billion yuan, an increase of 2.78% at the same time; The net profit attributable to the parent company was 14 million yuan, with a decrease of 68.13%; Deduct the net profit not attributable to the parent company -43 million yuan, with a decrease of 39.20%. The company announced the profit distribution plan for 2021 and plans to distribute a cash dividend of 1.00 yuan (including tax) for every 10 shares to all shareholders, with a cash dividend ratio of 48.52%.
Comments:
The growth of operating revenue is in line with expectations, and new display + new materials are working together. During the reporting period, the company’s new display business achieved a revenue of 5.071 billion yuan, an increase of 22.31% at the same time; The gross profit margin was 14.99%, with an increase of 0.29pct. The revenue of new materials business was 1.177 billion yuan, an increase of 48.75% at the same time; The gross profit margin was 22.29%, with an increase of 4.95pct. The new display business is the company’s basic revenue. In the future, it will continue to expand the production capacity of display modules and march into large-scale fields, which is expected to drive the steady improvement of the company’s business scale. In the new materials business, the production and sales of electrofusion zirconia, the traditional flagship product, increased by more than 30% year-on-year, and the production and sales of stable zirconium increased by more than 35% year-on-year. Positive progress was made in the business expansion of spherical quartz powder, nano barium titanate, rare earth polishing powder and nano composite zirconia.
The performance was lower than expected, mainly due to the disturbance of the provision for asset impairment. In 2021, the company made a total provision for asset impairment of 140 million yuan, an increase of 152.29%, including bad debt provision of 29.76 million yuan and inventory falling price provision of 110 million yuan. The amount of provision for inventory falling price is relatively high, which is mainly due to the return of sporadic finished products in orders that do not meet the quality requirements of customers, and the temporary storage of some raw materials due to the cancellation or suspension of customers’ orders. The above-mentioned finished products and raw materials can be sold in the market and have the value of continued use or repair. The company makes impairment provision based on the principle of prudence. Therefore, it should be emphasized that although the amount of provision for asset impairment in this year is large, it has more one-time impact on the company’s performance, is not sustainable, and may be reversed in the future. In addition, the company received 127 million yuan of government subsidies during the reporting period, compared with 155 million yuan in the same period last year.
Financial expenses decreased as scheduled, and R & D expenses increased to boost future growth: affected by exchange gains and losses in 2020, the company’s financial expenses reached 183 million yuan and decreased to 127 million yuan in 2021. In 2021, the company’s R & D expenditure reached 299 million yuan, an increase of 29.92% over the same period of last year, far exceeding the current net profit (248 million yuan). Although the growth of R & D expenses will affect the company’s performance in the short term, for technological innovation enterprises, it will continue to cultivate growth momentum for the company’s further development in the future.
UTG is still the catalyst for improving the current valuation: the market environment of folding screen mobile phones is gradually mature and is in the stage of accelerating the promotion. UTG is an ideal folding screen cover material and is expected to enter a rapid development channel. Chinese mobile phone manufacturers have gradually entered the field of folding screen mobile phones, and UTG demand is about to increase. In 2021, the company continued to promote the improvement of UTG yield and focused on the development of one-time molding iterative technology, which has been in a leading position in China. At present, the company’s UTG phase I project has the capacity of mass production and supply, and the cooperation with downstream customers has been more in-depth, and the products will be available soon. The construction of UTG phase II project (15 million pieces / year) is progressing in an orderly manner, and it is expected to continue to promote performance growth in the future. Relying on the scientific research empowerment of the group, new materials will be more attractive in the future. The company is positioned as the “display and new materials” platform in the “3 + 1” strategy by Kaisheng group. Under the background of the combination of production and research, it is expected to rely on the strong scientific research strength of the general glass new materials research institute (the former Bengbu Institute) to obtain more high-quality scientific research achievements. In fact, UTG is a typical case. We believe that the growth of the company’s UTG business has been gradually recognized by the market, but the development potential of the new material business has not been fully expected, especially some products with high technical content and added value. In 2021, the production and sales volume of spherical quartz powder of the company increased significantly, and the production scale reached the top three in China; Nano barium titanate has passed the certification of Chinese head enterprise to realize batch supply; Nano composite zirconia pilot products have passed customer certification; Major technological breakthroughs have been made in high-purity synthetic silica for semiconductors, with purity up to 6n-7n, aiming at domestic substitution. The above products have great growth space in the future.
The company’s new materials business platform mainly includes Bengbu Zhongheng, a wholly-owned subsidiary (products are fused zirconia, zirconium silicate, etc.) and Anhui Zhongchuang, a holding subsidiary (products are high value-added products such as nano barium titanate and rare earth polishing powder). In 2021, Bengbu Zhongheng achieved a revenue of 992 million yuan, an increase of 28.01% at the same time; The net profit was 88.16 million yuan, an increase of 90.91% and the net interest rate was 8.89%. Anhui Zhongchuang achieved a revenue of 435 million yuan, a decrease of 1.77% over the same period; The net profit was 103 million yuan, an increase of 118.04% and the net interest rate was 23.78%.
Profit forecast, valuation and rating: we are optimistic about the development trend of folding screen mobile phones and the company’s leading position in the field of UTG in China for a long time. In addition, the incubation of domestic photovoltaic companies and emerging biomedical materials also have broad potential for sustainable development in the future. As the company’s performance is greatly affected by impairment, government subsidies and changes in expenses, out of prudent consideration, we lowered the company’s net profit attributable to the parent company from 22 to 23 to 232 / 340 million yuan (32.36% and 19.62% lower than the last time), and increased the net profit attributable to the parent company in 2024 by 484 million yuan. However, we are still optimistic about the company’s future growth potential and continue to maintain the “overweight” rating.
Risk tips: the market development of UTG business is not as expected, the R & D and construction of new material projects are not as expected, the risk of epidemic rebound and trade friction, the risk of asset and credit impairment, and the risk of exchange rate fluctuation.
