\u3000\u30003 An Hui Wenergy Company Limited(000543) 00054)
Key elements of the report:
On the evening of April 14, 2022, Hubei Dinglong Co.Ltd(300054) released the annual report of 2021 and the performance forecast of the first quarter of 2022. In 2021, the company realized an operating revenue of 2.356 billion yuan, a year-on-year increase of 29.67%; The net profit attributable to the shareholders of the listed company was 214 million yuan, a year-on-year increase of 233.60%. In 2022q1, the company expects to realize an operating revenue of 560580 million yuan, with a year-on-year increase of 7.7% – 11.55%; The net profit attributable to the shareholders of the listed company was 65-75 million yuan, with a year-on-year increase of 73.16% – 99.80%; The net profit attributable to non shareholders of listed companies was 60-70 million yuan, with a year-on-year increase of 14.43% – 33.5%.
Key investment points:
Improvement of business margin of traditional printing and copying general consumables: during the reporting period, the revenue of the company’s consumables upstream products, ink cartridge products and toner cartridge products increased. The printing and copying general consumables segment achieved a total operating revenue of 2.013 billion yuan, a year-on-year increase of 17.79%. However, due to the intensification of industry competition and the continuous loss of selenium drum products, the profitability of the sector declined, and the gross profit margin of the sector was 29.15%, down 4.08% year-on-year. Looking at the pattern of consumables industry, the company still has the advantages of the whole industry chain, and the selenium drum business has begun to reduce losses year-on-year, and is expected to gradually turn losses into profits. In the future, the consumables business is expected to continue to contribute a steady source of revenue to the company.
CMP led the rapid development of Pan semiconductor business: during the reporting period, the company successfully established its dominant position in the field of polishing pads in China, the client demand was steady and large-scale, and successfully obtained overseas orders. The annual sales revenue was 302 million yuan, a year-on-year increase of 284%, and the gross profit margin of the sector exceeded 60%. The company has realized the autonomy of key raw materials of polishing pads and the full coverage of mature and advanced processes. Some advanced process products have been verified by customers. The current production capacity is 300000 pieces, and another 200000 pieces are expected to enter the trial production state in 2022. In terms of polishing liquid, the company has also carried out multi process and multi link layout. Among them, the al process polishing liquid products with the lowest localization rate and the highest technical threshold have also successfully achieved technical breakthrough, and have been independently prepared in the grinding particle link of core raw materials. Now it has a production capacity of 5000 tons of polishing liquid, and has successfully obtained orders from downstream mainstream wafer manufacturers, From 2022, the polishing liquid is expected to officially enter the harvest period and achieve a considerable profit level. In addition, Cu cleaning solution has also been verified by downstream customers and has stable supply capacity. At present, the company basically has the ability to provide customers with one-stop CMP materials and services. It is expected that CMP materials will continue to grow at a high speed in 2022. At present, the company plans to acquire Dinghui microelectronics shares, the main CMP business, from the employee stock ownership platform, and increase the shareholding ratio from 72.35% to 91.35%, so as to strengthen the company’s strategic layout in the field of semiconductor materials business and improve the company’s comprehensive profitability.
YPI is about to enter the accelerated growth stage: during the reporting period, the company’s YPI slurry successfully obtained orders from G6 production line, the main customer, and realized sales revenue of nearly ten million yuan. In 2022, with the large volume of flexible panel production line of Chinese panel manufacturers, YPI orders will enter the accelerated growth stage. In addition, during the reporting period, the pilot client of PSPI and tfe-ink products newly developed by the company has been verified well, and will be put into construction of large-scale production line. At present, the subsidiary of flexible display technology, which is mainly engaged in display materials, is still in the investment period. In the future, with the large-scale production of YPI and the production of new R & D materials, it is expected to gradually enter the harvest period and realize profitability. At present, the company plans to increase the shareholding ratio of flexible technology in the form of equity transfer and capital increase, and introduce new investors for flexible technology to enrich its capital strength. After the completion of the transfer, the company’s shareholding in Flexo technology will increase to 70%, and the registered capital of flexo technology will increase from 38.23 million yuan to 59.567 million yuan, which will help the company improve its layout in the field of display materials, and the new financing funds will also help flexo technology achieve sustainable and stable development.
2022q1 performance meets expectations: To sum up, in 2022, the company is expected to continue the steady operation of traditional business and realize the rapid growth of Pan semiconductor materials business. The company’s revenue in 2022q1 is expected to decline by 17.68% – 20.52% month on month compared with 2021q4, and the net profit deducted from non parent company in the same period is expected to increase by 5.32% – 22.87% month on month, indicating that the company’s comprehensive profitability is improving with the increase of the proportion of Pan semiconductor materials business. In addition, considering that the current epidemic situation at home and abroad is still not optimistic, the frequent occurrence of force majeure factors such as the Japanese earthquake and the uncertain international geopolitical situation, the increased risk of Chinese enterprises purchasing overseas semiconductors and core upstream materials of display panels is expected to accelerate the domestic substitution process of key materials. At present, the verification results of the company’s Pan semiconductor materials are good, and the downstream market development is quite effective. Therefore, we will continue to be optimistic about the growth of the company’s Pan semiconductor materials.
Profit forecast and investment suggestions: it is estimated that the net profit attributable to the parent company from 2022 to 2024 will be RMB 357 / 584 / 780 million respectively, and the corresponding P / E will be 48.2 / 29.4 / 22.0 respectively (corresponding to the closing price of RMB 18.25 on April 14, 2022), maintaining the “overweight” rating.
Risk factors: the risk that the progress of production expansion R & D projects is less than expected, the risk of intensified competition in consumables business, and the risk that the downstream demand is less than expected due to the epidemic.
