\u3000\u3 Bohai Water Industry Co.Ltd(000605) 376 Jiangsu Boqian New Materials Stock Co.Ltd(605376) )
Event: on April 11, 2022, the company released its annual report for 21 years: the company achieved revenue of 970 million yuan in 21 years, yoy + 62.74%; The net profit attributable to the parent company is 238 million yuan, yoy + 49.59%, deducting 223 million yuan of non net profit, yoy + 43.59%. Among them, Q4 achieved a revenue of 261 million yuan, yoy + 40.97%, mom + 3.98%; The net profit attributable to the parent company was 61 million yuan, yoy + 39.75% and – 7.75% month on month, mainly due to the increase of Q4 nickel price by 6.56% month on month and the decrease of gross profit margin by about 4%.
The gross profit margin of metal powder is under pressure in the short term, and the sharp corners of silicon powder have been exposed, and the product and customer structure have been continuously optimized
Production and sales are booming, but raw materials and exchange rates put pressure on short-term profits. In 21 years, the company built 24 nickel powder production lines with its own funds and further improved the production capacity layout. The production / sales of nickel powder reached 1451 / 1530 tons respectively, with a year-on-year increase of + 73.02% / + 70.54%. At the raw material end, the average price of Shanghai nickel 21q4 reached 147000 / ton, yoy + 21.26%; Q4 the average spot exchange rate of USD against RMB is 6.39, yoy-3.31%. Affected by the continuous rise of raw material prices and the decline of the US dollar, the overall gross profit margin of the company weakened slightly. In the 21st year, the company’s overall gross profit margin was 38.33% (yoy-7pct), of which the gross profit margin of nickel powder was 43.35% (yoy-5.78pct).
At the end of product structure, nickel powder is still the main revenue of the company (accounting for 82.7%), but it is worth noting that the nano silicon powder business began to form a certain scale of revenue, marking the further enrichment and improvement of the company’s product structure. In terms of customer structure, Samsung Electric is still the company’s largest customer, but the proportion of revenue has continued to decline for three consecutive years (83.5 / 67.2 / 64.4% in 19-21 years respectively), which reflects the optimization and expansion of the company’s customer structure and the continuous reduction of dependence on a single customer to a certain extent.
Domestic substitution goes hand in hand with the increase of overseas market share, and the platform application of underlying technology continues to open up growth space
From the external driving dimension, the global demand for MLCC continues to grow, and the domestic substitution of key materials in China is in a parallel development period. The global development of 5g and automotive electronics has increased the demand for MLCC. The MLCC demand of 5g mobile phones is expected to increase by 20% compared with 4G mobile phones, and the MLCC consumption of pure electric vehicles is six times that of traditional fuel vehicles. China will also raise the guarantee of domestic independent core components and key materials into a national strategy, requiring the independent guarantee rate to reach 70% by 2025, and the localization and substitution process of electronic materials will continue to accelerate. Under the background of high global demand and accelerated domestic substitution, the company, as a leading supplier of MLCC key substrates, is expected to continue to benefit.
In the dimension of endogenous growth, the company has the core competitiveness of underlying technology platform, and PVD pulverizing process enables the horizontal expansion of high-end powder (metal + non-metal). In addition to the traditional metal powder products such as nickel, copper and silver, the company continues to layout new products such as silicon powder, alloy powder and silver coated copper powder relying on the underlying technology, and the silicon powder has formed income in 21 years, waiting for the industrialization application opportunities brought by the trend of new technology. In the past 21 years, the company’s R & D investment increased by 83.69% year-on-year. The overweight layout of projects such as “second-generation gas phase classification technology” and “digital upgrading of production line” will further enhance the added value of products, reduce production costs and consolidate the company’s core competitiveness.
Investment suggestion: as a leading enterprise in China’s MLCC nickel powder industry, the company’s performance is expected to maintain rapid growth with the expansion of production capacity and the large volume of silicon powder and silver coated copper powder. Taking into account the sharp rise of raw materials and the continuous decline of the US dollar, we adjusted the 22-year profit forecast and expected eps1 in 22-24 years 23 / 1.44/1.64 yuan (22 / 23 years ago, the value was 1.69 / 2.17), corresponding to the current stock price of 34 / 29 / 25X, maintaining the “buy” rating.
Risk tips: the risk of macroeconomic fluctuations restraining demand, the risk of intensified industry competition, the risk of exchange rate fluctuations, the risk of raw material price fluctuations, the risk of high customer concentration, and the risk of intellectual property litigation.
