\u3000\u30003 Dongguan Winnerway Industry Zone Ltd(000573) 00057)
The company released the annual report of 2021: the company achieved a revenue of 5.437 billion yuan in 2021, a year-on-year increase of + 7.28%; The net profit attributable to the parent company was -439492 million yuan, a year-on-year increase of -156.99%; 21q4 achieved a revenue of 1.364 billion yuan, a year-on-year increase of – 5.68%; The net profit attributable to the parent company was -662151 million yuan, a year-on-year increase of – 345%. The main reasons why the company’s annual net profit attributable to the parent company turned into loss: 1) during the year, the prices of aluminum ingots, white cardboard and other bulk materials rose, the price difference of aluminum outside China fluctuated, and the investment of relevant expenses increased; 2) The company has accrued the goodwill of its subsidiaries and the provision for impairment of functional film business inventories, totaling 799252 million yuan.
The main business is stable, and the large amount of aluminum foil can be expected. Among them, electronic foil has entered the customer supply system of head power battery. In 2021, the company’s revenue from aluminum processing / paper packaging / functional film business was 2.849 billion yuan, 507 million yuan and 33 million yuan respectively, with a year-on-year increase of + 11.12% / – 0.02% / – 33.52% respectively. Breakthrough progress was made in the market development of aluminum processing business and entered the supply chain of head customers: the company sold 2886 tons of battery foil in 2021 (1687 tons in Q4), an increase of 825% year-on-year; The sales volume of battery aluminum foil blank was 23000 tons, with a year-on-year increase of 155%. At present, the company has entered the Contemporary Amperex Technology Co.Limited(300750) supply chain and supplied to many high-quality customers such as excellent foil talents, excellent new materials and Ningde BofA. In December, the company’s 72000 ton high-precision battery aluminum foil phase I project was put into operation. At present, the aluminum foil production capacity in hand is 123000 tons, the production capacity under construction is 32000 tons, and the planned production capacity in the future is 100000 tons. After all, the production capacity is 255000 tons, ranking the first echelon in the industry. It continues to expand its advantages in the new energy segment with high development potential and lay a foundation for long-term development.
The cost pressure is weakened, the lithium battery aluminum foil is in large quantity, and the provision for impairment is light. Since 21q4, the company has successively reached agreements with most customers on adjusting the settlement pricing period and negotiating to increase the processing fee, so as to effectively reduce the impact of aluminum price fluctuation on performance and reduce the cost pressure. In addition, the company’s provision for impairment led to pressure on short-term performance, and the relevant risks were fully released. We believe that the company will enter the performance fulfillment period in 2022: 1) in the traditional business, the processing fee of food grade aluminum foil increases, but the cost transmission lags behind, and based on the low base effect of Q1 performance over the years, it is expected that the performance of 22q1 will increase significantly year-on-year; 2) High precision battery aluminum foil is expected to start in 22q2, which is expected to significantly increase profits. We expect that the net profit attributable to the parent company in 22-24 years will be RMB 259 / 359 / 435 million, with a year-on-year increase of + 690.5% / 38.5% / 21.1%, maintaining the “buy” rating.
Risk tips: the price of raw materials rises sharply, the production capacity is less than expected, the market competition intensifies, and the risk of repeated outbreaks.
