\u3000\u30 Chongqing Baiya Sanitary Products Co.Ltd(003006) 66 Konfoong Materials International Co.Ltd(300666) )
On April 25, Konfoong Materials International Co.Ltd(300666) released the annual report of 2021 and the first quarterly report of 2022. In 2021, the company achieved a revenue of RMB 1.594 billion, a year-on-year increase of 36.64%, and a deduction of non net profit of RMB 76 million, a year-on-year increase of 25.59%. In the first quarter of 2022, the company achieved revenue of 490 million yuan, a year-on-year increase of 54.29%, and deducted non net profit of 42 million yuan, a year-on-year increase of 94.75%.
The profit in 2021 is under short-term pressure, and the performance increases sharply in the beginning of 2022. In 2021, the company achieved a revenue of 1.594 billion yuan, including 518 million yuan for tantalum targets, 277 million yuan for aluminum targets, 214 million yuan for titanium targets, 184 million yuan for semiconductor parts, and 402 million yuan for other businesses, mainly other types of targets and panel materials. On the profit side, the company’s comprehensive gross profit margin in 2021 was 25.56%, a year-on-year decrease of 2.54 PCT, mainly due to: 1) affected by the price fluctuation of upstream raw materials, the company’s gross profit margin of tantalum target and titanium target decreased by 2.3 PCT and 2.47 PCT respectively; 2) At present, the gross profit margin of semiconductor parts business is still at a low level, 23.93%. With the gradual easing of short-term price pressure, the company’s performance started a high growth in the first quarter of 2022, with a gross profit margin of 29.96%, an increase of 7.69 PCT month on month, and a deduction of non net profit of 42 million yuan, a year-on-year increase of 94.75% and a month on month increase of 476.74%.
Advanced target materials have been steadily verified by customers. In 2021, the company’s main target industry made important progress. Tantalum targets and rings, copper targets and copper manganese alloy targets passed the evaluation of world-class customers, and the procurement volume continued to increase. In particular, the volume of tantalum targets in TSMC, Hynix, Semiconductor Manufacturing International Corporation(688981) and other important clients continued to increase, and the revenue increased by 28.02% year-on-year. Copper manganese and copper aluminum alloy targets have passed the mass production evaluation of important customers such as TSMC and Huahong Hongli, and successfully began to obtain batch orders. At the same time, the company also actively deployed upstream, and carried out raw material business through Tongchuang Purun, an affiliated company controlled by the chairman, and Ningbo Chuang run, a joint-stock subsidiary, to promote the localization and independent control of raw materials. Tongchuang Purun, an affiliated company, mainly engaged in high-purity tantalum and high-purity aluminum business. In 2021, the amount of materials supplied to Jiangfeng was 90.91 million yuan, a year-on-year increase of 51.35%; Ningbo chuangrun, a subsidiary, mainly engaged in high-purity titanium business. In 2021, the amount of materials supplied to Jiangfeng was 47.83 million yuan, a year-on-year increase of 62.18%. The proportion of independent supply of raw materials has increased steadily.
The semiconductor parts production line was completed and put into operation, and the volume of new products was accelerated. Semiconductor parts are the company’s category business. With the gradual completion and operation of three parts production bases in Yuyao, Ningbo, Fengxian, Shanghai and Shenbei, Shenyang, the company’s precision parts products are widely used in PVD, CVD, etcher and other equipment, and has formed extensive cooperation with many manufacturers such as China’s semiconductor equipment leader Naura Technology Group Co.Ltd(002371) , tuojing technology, Kingsemi Co.Ltd(688037) , Shanghai shengmei, Shanghai microelectronics and Yitang technology. In 2021, the company achieved an income of 184 million yuan, a year-on-year increase of 239.96%. Semiconductor precision parts have a broad market space, accounting for about 30-40% of the equipment market, opening up growth space for the company.
Investment suggestion: Konfoong Materials International Co.Ltd(300666) is the leader in China’s high-purity sputtering target materials, and the new business of semiconductor equipment parts has also made brilliant progress. We expect the company to achieve a revenue of 2.347/31.97/4.080 billion yuan from 2022 to 2024, and a net profit attributable to the parent company of 210 / 349 / 460 million yuan, corresponding to pe48 / 29 / 22 times of the current price from 2022 to 2024. We are optimistic about the long-term growth of the company’s businesses and maintain the “recommended” rating.
Risk warning: product verification is not as expected; Cyclical fluctuations in downstream industries; Market competition intensifies.
