\u3000\u30003 An Hui Wenergy Company Limited(000543) 00054)
Key elements of the report:
On the evening of April 25, 2022, Hubei Dinglong Co.Ltd(300054) released the report for the first quarter of 2022. During the reporting period, the company achieved an operating revenue of 570 million yuan, a year-on-year increase of 9.57%; The net profit attributable to the shareholders of the listed company was 71.369 million yuan, a year-on-year increase of 90.12%.
Key investment points:
The revenue and profit of CMP polishing pad increased both, and the profit level of Q1 increased significantly: during the reporting period, the year-on-year growth of the company’s revenue and profit level was mainly due to the year-on-year growth of CMP polishing pad business revenue and profit level, and the mass production and sales of PI slurry new products. Moreover, due to the revenue growth of the more profitable polishing pad business, the profitability of the company improved significantly in 2022q1. During the reporting period, the gross profit margin and net profit margin of sales were 39% and 14.05% respectively, an increase of 5.56 PCTs and 3.65 PCTs respectively compared with 2021. At present, the company’s polishing pad phase II production capacity is continuously released, and other pan semiconductor materials are gradually realizing mass production and contributing to performance. At the same time, the main business operation of the company’s traditional consumables is also improving marginally. It is expected that the company’s performance will continue to improve in 2022.
Qianjiang polishing pad phase III Industrial Park project has entered the equipment installation stage, and trial production in summer is expected: by the end of the reporting period, the company’s net cash flow from construction in progress, other non current assets and investment activities has fluctuated greatly compared with the end of 2021, mainly due to the increase in equipment purchase and construction investment of Qianjiang polishing pad phase III Industrial Park project. The project is expected to enter the equipment commissioning and trial operation stage in the middle of this year. In addition, the company’s polishing pad supply capacity is expected to be significantly improved in 2022.
It is proposed to repurchase shares and implement employee stock ownership plan or equity incentive to demonstrate the development confidence of the company: now the company plans to use its own funds to repurchase shares. The total repurchase amount is in the range of 200400 million yuan, and the repurchase price is no more than 29 yuan / share. The repurchased shares will be used to implement employee stock ownership plan or equity incentive. At present, the company’s fundamentals are steadily improving. The share repurchase fully shows the confidence of the company’s management in the future sustainable development. The implementation of employee stock ownership plan or equity incentive will also help the company retain and attract high-level talents, so as to jointly promote the growth of the company.
Profit forecast and investment suggestions: it is estimated that the company’s 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 40.7 / 24.8 / 18.6 respectively (corresponding to the closing price of RMB 15.41 on April 25, 2022). Considering the continuous decline of the company’s recent stock price and valuation, it has a certain configuration cost performance, so we raise the rating to “buy”.
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, the risk that the downstream demand is less than expected due to the epidemic, and the risk of exchange loss due to exchange rate fluctuations.
