\u3000\u3 Guocheng Mining Co.Ltd(000688) 388 Guangdong Jiayuan Technology Co.Ltd(688388) )
Event: Guangdong Jiayuan Technology Co.Ltd(688388) released the annual report for 2021. The net profit attributable to the parent company in 2021 was 550 million yuan, with a year-on-year increase of 195.02%, of which the net profit attributable to the parent company in 2021q4 was 156 million yuan Billion yuan, an increase of 122.75% year-on-year and 3.84% month on month. In 2021, the net profit not attributable to the parent company was 497 million yuan, a year-on-year increase of 203.05%, of which 132 million yuan was deducted in 2021q4, a year-on-year increase of 95.61% and a month on month decrease of 1.67%.
Lithium copper foil contributes to the main revenue and profit, and the relationship of cooperation with Contemporary Amperex Technology Co.Limited(300750) is stable. In terms of products, the revenue of lithium copper foil was 2.519 billion yuan, a year-on-year increase of + 133.57%, accounting for about 90%, contributing a gross profit of 761 million yuan, accounting for 90.4%, and a gross profit margin of about 30.23%, a year-on-year increase of + 4.34pct. The revenue of standard foil was 285 million yuan, a year-on-year increase of + 130.19%, accounting for about 10%, contributing a gross profit of 80 million yuan, accounting for 9.6%, and a gross profit margin of about 28.23%, a year-on-year increase of + 18.37 PCT. At the customer level, the concentration of downstream customers is high. The sales of the top five customers are 2.355 billion yuan, accounting for 83.98% of the total revenue. The company’s cooperative relationship with Contemporary Amperex Technology Co.Limited(300750) and the sales of Contemporary Amperex Technology Co.Limited(300750) and its affiliated companies account for 54.90% of the company’s revenue.
Production and sales increased significantly, and the proportion of extremely thin copper foil increased rapidly. In 2021, the company’s copper foil production and sales were 2.8127800 tons respectively, with a year-on-year increase of 85.72% / 73.68%, of which the production and sales of ≤ 6 micron copper foil were 1.8618400 tons respectively, with a year-on-year increase of 170.37% / 139.1%, accounting for 66.17% and 66.21% of the company’s copper foil production and sales, with a year-on-year increase of 20.72 PCT / 18.12 PCT respectively. The shipment of 4.5 micron copper foil in extremely thin copper foil may also increase, and the demand for copper foil is strong. The annual sales of 2022 may continue to increase.
The company has good operating efficiency and low turnover days of copper foil inventory. The net inventory in 2021 was RMB 323 million, which was mainly due to the increase of the company’s raw material preparation, inventory goods, products in process, issued goods and revolving materials. The number of inventory turnover days in 2021 is about 43.4 days, which is in a low position, reflecting high operating efficiency. Accordingly, the situation of asset impairment loss is also optimistic. In addition, in terms of period expenses, the three expenses totaled 109 million yuan in 2021, with a year-on-year increase of 310.33%, mainly due to the expansion of sales scale and the interest expenses of convertible bonds.
In 2021, the asset liability ratio increased to 40.5%, and the operating cash flow increased steadily. The increase in the company’s asset liability ratio may be mainly due to the increase in financing demand during the expansion of business scale. The company issued convertible bonds in H1 of 2021 to build a high-performance copper foil project with an annual output of 15000 tons. By the end of 2021, the book value of bonds payable was 834 million yuan (0 in 2020). In the future, as the debt to equity swap continues, this part of liabilities may decline, and if the fixed increase project is successfully implemented, the equity assets may increase accordingly, and the capital structure is expected to continue to be optimized. In terms of operating cash flow, the net operating cash flow in 2021 was 318 million yuan, with a considerable year-on-year increase, accounting for 11% of revenue and basically stable.
The production capacity has entered a period of rapid expansion, and the fixed increase helps the company accelerate its development. In 2021, the 5000 ton high-performance copper foil technical transformation project was put into operation. At the same time, after Q3 company acquired the 5000 ton capacity of Shandong xinliyuan electronic copper foil technology in 2021, the total capacity reached 26000 tons. (1) The main incremental projects in 2022 include: 1) the first production line with an annual output of 5000 tons of high-performance copper foil project in Baidu Town, Meizhou has been successfully started and put into trial production in December 2021, and the subsequent production capacity will continue to be released. 2) The projects of Guangdong Jiayuan Technology Co.Ltd(688388) park with an annual output of 16000 tons and Guangdong Jiayuan Technology Co.Ltd(688388) (Ningde) with an annual output of 15000 tons of high-performance copper foil are planned to be put into operation gradually in the second half of 2022. (2) Medium and long term highlights: the construction of Jiangxi Jiayuan 20000 tons / year electrolytic copper foil project (PCB copper foil) and Shandong Jiayuan 30000 tons / year high-precision ultra-thin electronic copper foil project (phase II project) is progressing steadily. The company also plans to invest in the construction project of 50000 tons / year high-end copper foil in Meixian County, and plans to establish a joint venture with Contemporary Amperex Technology Co.Limited(300750) to plan and construct 100000 tons / year high-performance copper foil project. The company’s fixed growth plan is advancing steadily, In the future, it may escort the landing of production capacity to help the company accelerate its development.
The product structure of copper foil may continue to upgrade, and the profit level is expected to maintain a high position. It is expected that the supply of lithium battery copper foil will remain tight throughout the year in 2022. At the same time, the demand for 4.5 micron copper foil under the demand of battery energy density may continue to increase. The company is one of the few manufacturers with 4.5 micron batch supply capacity. The R & D investment in 2021 is 147 million yuan. It continues to increase R & D investment in product fields such as lithium battery copper foil and electrolytic copper foil of high-frequency and high-speed circuit board. The product quality and technology are leading, and the product structure may continue to penetrate into extremely thin copper foil, Or effectively increase the company’s profits.
Investment suggestion: we expect the company’s operating revenue to be 5.373 billion yuan, 9.446 billion yuan and 14.048 billion yuan respectively from 2022 to 2024, and its net profit to be 1.05 billion yuan, 1.95 billion yuan and 3.103 billion yuan respectively. The corresponding EPS is 4.42, 8.11 and 12.74 yuan / share respectively. At present, the corresponding PE share price is 20.2, 11 and 7 times. Maintain the “overweight-a” rating, and the six-month target price is 133 yuan / share.
Risk tip: the demand is less than expected, the technological transformation of lithium battery and fluid collector, fixed increase and project progress are less than expected
