\u3000\u3 Jointo Energy Investment Co.Ltd.Hebei(000600) 552 Triumph Science & Technology Co.Ltd(600552) )
Event: on March 9, the company released the annual report of 2021, and the annual operating revenue was 6.324 billion yuan, yoy + 24.79%; The net profit attributable to the parent company was 157 million yuan, yoy + 30.35%; The net operating cash flow was 493 million yuan, yoy + 287.88%, and the above three operating indicators reached a record high. 21q4 achieved an operating revenue of 1.48 billion yuan in a single quarter, yoy + 2.78%, QoQ + 1.39%; The net profit attributable to the parent company was 14 million yuan, yoy-68.13% and qoq-77.15%. At the same time, the company announced the profit distribution plan for 2021. It plans to distribute a cash dividend of 0.10 yuan per share, a total of 76 million yuan, with a cash dividend ratio of 48.52%.
The two businesses go hand in hand, and the volume and price of main products rise simultaneously. The company is an important new display and new material industrialization platform under China Building Materials Group. Relying on the industrial layout of new glass materials, the company has comprehensively promoted “quality and efficiency improvement, transformation and upgrading”, and its profitability has been improved. The decline of 21q4 performance is mainly due to the provision for asset impairment of 140 million yuan at the end of the year, yoy + 178.81%, including bad debt provision of 30 million yuan and inventory falling price provision of 110 million yuan. The one-time impairment does not affect the basic good orientation of the company.
(1) new display business: it has the layout of the whole industry chain from glass original chip to touch display integrated module, actively layout high value-added medium and large-size modules, and continuously optimize the product structure. Adhering to the strategy of “big customers, big orders”, the company provides touch display overall solutions and product customization services for brand customers such as Amazon, Samsung, LGD, Acer, ASUS, Baidu, BOE and Dell. During the reporting period, the company’s flat panel module maintained a leading position in the industry; In cooperation with core customers, the laptop module has successfully developed 11.6-inch flat-panel laptop two in one products, and carried out OEM and other new businesses. Its performance has achieved rapid growth and broad growth space; Self research 30 μ Mutg has been verified by customers, and its performance and yield have reached the global leading level. In 2021, the company’s new display business achieved a revenue of 5.071 billion yuan, yoy + 22.31%, and the gross profit margin was 14.99%, with a year-on-year increase of 0.29pct; The product sales volume was 38.67 million pieces, yoy + 9.93%, ASP was 131 yuan / piece, yoy + 11.26%.
(2) new material business: Based on zirconium series materials, it continues to expand to titanium series, silicon-based and other product series. Customers include Vesuvius, Saint Gobain, Ruitai, kanglitai, Dow, Kyocera, taolixi, etc. During the reporting period, the company maintained the leading position in the electrofusion zirconia industry, and its production and sales increased by more than 30% year-on-year; Stable zirconium with high added value has a strong demand in bioceramics, electronic ceramics, new energy and other fields, and its production and sales have increased by more than 35% year-on-year; In addition, there are important breakthroughs in spherical quartz powder, nano barium titanate, nano composite zirconia, high-purity synthetic silica and other products. In 2021, the company’s new materials business achieved a revenue of 1.177 billion yuan, yoy + 48.75%, and the gross profit margin was 22.29%, with a year-on-year increase of 4.95pct; Product sales reached 46500 tons, yoy + 7.02%; ASP is 25300 yuan / ton, yoy + 39.00%.
Folding screen mobile phones have entered the fast lane of development, and UTG cover sector is the general trend. Since the launch of the world’s first folding screen mobile phone flexpai in 2018, Samsung, Huawei, Motorola, Xiaomi, oppo and glory have successively launched folding screen products, and vivo and Apple also have corresponding layouts. Since 2021, major brands have successively launched products below 10000 yuan, including Xiaomi mixfold, 2 Samsung Galaxy zflip35g, Huawei p50pocket, oppofindn and glory magicv. With the maturity of technology and the improvement of supply chain, the price of folding screen mobile phones is expected to continue to decline and the penetration rate will be further improved. According to the calculation of DSCC, the global shipment of folding screen mobile phones will reach 44 million in 2025, with a corresponding sales volume of 105.3 billion US dollars; Airy consulting predicts that the shipment volume of China’s market will be 1.38 million in 2025, and the CAGR will reach 69% in four years. Cover material is an important upgrading direction of folding screen, and the current mainstream schemes are CPI and UTG. UTG is superior to CPI in hardness, light transmittance, scratch resistance, flatness, thickness and high temperature resistance, but it is technically difficult, low yield and high cost. At present, it is only used by Samsung and oppo. With the breakthrough of UTG technical difficulties, the improvement of yield and the decrease of cost, and the increase of suppliers with mass production capacity, the penetration rate of UTG is expected to increase continuously. Cinno predicts that the carrying capacity of UTG in China will be about 5 million in 2025, and the CAGR will reach 77% in four years.
The advantages of vertical integration are clear, and the volume of UTG products can be expected. The company has the only national UTG production process technology of “high strength glass – thinning – high-precision post-processing” in China, which can effectively control costs and ensure quality consistency. Self research 30 μ Mutg products can be bent for 400000 times continuously, and their performance and yield have reached the global leading level. It has been verified by customers, and is expected to fully benefit from the rapid expansion of folding screen UTG market. The company’s UTG phase I production line was completed and put into operation in July 2021, forming a production capacity of 2 million pieces / year and phase II production capacity of 15 million pieces / year. It is expected to be put into operation by the end of 2022. In 2021, the company and Huawei jointly issued the invention patent of “a processing method to improve the bending performance of flexible glass”.
Investment suggestion: we estimate that the company’s operating revenue from 2022 to 2024 will be 7.218 billion yuan, 9.168 billion yuan and 10.88 billion yuan respectively, and the net profit attributable to the parent company will be 249 million yuan, 357 million yuan and 481 million yuan respectively. It will be covered for the first time and given a “Buy-A” investment rating.
Risk warning: macroeconomic operation is not as expected; Downstream demand is lower than expected; The demand for folding screen mobile phones is less than expected; The progress of capacity expansion is less than expected; Technical iteration risk; Exchange rate fluctuation risk.
