\u3000\u3 Jointo Energy Investment Co.Ltd.Hebei(000600) 552 Triumph Science & Technology Co.Ltd(600552) )
Event: the company released the report for the first quarter of 2022. In Q1, the operating revenue was 1.312 billion yuan, a decrease of 19.18% at the same time; The net profit attributable to the parent company was 25 million yuan, an increase of 57.41% at the same time; Deduct the net profit not attributable to the parent company of 16 million yuan, an increase of 65.74% at the same time.
Comments:
The business scale of display module contracted, resulting in a year-on-year decrease in revenue. During the reporting period, the company showed a year-on-year decline in module business revenue. We think there are two main reasons: 1. The first quarter has always been the traditional off-season of the display module market, while 21q1 is the historical peak and the base is high; 2. Since the second half of the year, the company has adjusted the settlement mode of the display module business and successfully introduced the new OEM business of international well-known customers, which has reduced the scale of revenue. However, this move also reduces the operating risk simultaneously, and can still maintain a good profit level. We judge that UTG business is still waiting for the release of orders from downstream customers, and 22q1 should have no revenue contribution for the time being.
The large volume of new materials drives the improvement of profitability. During the reporting period, the company’s Zirconium new materials business has a large-scale trend, and its relatively new display business has a high profit margin, which drives the increase of gross profit margin and net profit margin. The gross profit margin of 22q1 company was 14.78%, an increase of 1.49pct; The net profit margin on sales was 3.40%, with an increase of 1.59pct. Among them, the net interest rate is the highest in the same period since 2016.
Custody of ultra-thin glass assets of controlling shareholders and optimization of resource allocation. On April 14, 2022, the company signed the equity custody agreement with the controlling shareholder Triumph Science & Technology Co.Ltd(600552) group to manage 100% of the equity of the three ultra-thin glass production companies it holds, namely Bengbu Zhongxian, Longhai glass and Longmen glass. Ultra thin glass is the upstream industry of the company’s new display business. After the company trusts relevant assets, it can better carry out industrial chain coordination and realize the optimal allocation of resources. According to the announcement, the company may timely acquire the above assets according to the strategic layout and business development needs in the future, which is in line with the positioning of Triumph Science & Technology Co.Ltd(600552) group for the company’s “display materials and application materials” platform.
The non-public offering of shares was accepted by the CSRC. On April 24, 2022, the CSRC accepted the company’s application for non-public offering of shares. This matter is: non-public offering of no more than 229 million A-Shares (including this number) to no more than 35 (including 35) investors, including Triumph Science & Technology Co.Ltd(600552) group, raising funds of no more than RMB 1.5 billion (including this number), which is specially used for UTG phase II project, Shenzhen Guoxian new display R & D and production base project, repayment of interest bearing liabilities and supplement of working capital.
Profit forecast, valuation and rating: the folding screen mobile phone market environment is gradually mature and is in the stage of accelerating promotion. We are optimistic about the development trend of folding screen mobile phones and the company’s leading position in the field of UTG in China for a long time. In addition, the company’s new materials business is also incubating continuously, aiming at emerging directions such as semiconductor, photovoltaic and biomedicine, which has broad development potential in the future. We maintain the company’s EPS of 0.30/0.45/0.63 yuan for 22-24 years and maintain the “overweight” rating.
Risk tips: the market development of UTG business is not as expected, the R & D and construction of new material projects are not as expected, the risk of epidemic rebound and trade friction, the risk of asset and credit impairment, and the risk of exchange rate fluctuation.
