\u3000\u3 Shengda Resources Co.Ltd(000603) 806 Hangzhou First Applied Material Co.Ltd(603806) )
Key investment points
Event: in 2022q1, the company achieved an operating revenue of 3.884 billion yuan, a year-on-year increase of 38.02% and a month on month decrease of 1.12%; The net profit attributable to the parent company was 339 million yuan, a year-on-year decrease of 31.51% and a month on month decrease of 60.59%. The gross profit margin in 2022q1 was 16.37%, a year-on-year decrease of 12.60pct and a month on month decrease of 13.5% 57pct。 The decline in profit was caused by the decline in profit of adhesive film and the cautious provision of 65 million bad debt reserves.
The profit of adhesive film is under pressure in the short term and is optimistic about the double rise of volume and profit in 2022q2: the delivery of adhesive film in 2022q1 is 300 million square meters, and 280 million square meters are confirmed, with a month on month ratio of + 26% / + 22%. It is estimated that the gross profit margin of 2022q1 is about 16.4%, with a decrease of 13pct / ring down 15pct, corresponding to the single average net profit of 1.1-1.2 yuan / Ping (about 1.4 yuan / Ping after the reversal of bad debt reserves). The reasons for the decline in profits are as follows: 1) affected by the rise in the price of silicon and the decline in demand, the price of adhesive film decreased in February 2022. It is estimated that the average price of 2022q1 is 11-12 yuan / Ping, with a ring down of 22%; 2) The price of raw material particles rose, with an increase of about 24% in 2022q1, and the cost rose rapidly. From the perspective of 2022q2, shipments in April 2022 were flat month on month, with an increase of more than 10% in May 2022. Strong overseas demand + power station installation and start-up led to the month on month growth of 2022q2. The price of adhesive film increased twice from March to April 2022. At present, 15-16 yuan / level is close to the high level of 2021q4, and the conduction cost is rising. It is optimistic that the volume and profit of 2022q2 will rise.
In 2022, the adhesive film will benefit from the growth of the industry and the profit structure will continue to improve: we expect that the installed capacity of the photovoltaic industry in 2022 will be 240gw +, and the corresponding demand for adhesive film will be 2.5-2.6 billion Ping, an increase of 45% at the same time. We expect that the company will ship 1.4 billion Ping + in 2022, maintain the market share of about 55%, and fully enjoy the growth of the industry. At the same time, the proportion of the company’s high profitable products such as white film + POE / EPE will increase to 50%, and launch the corrosion-resistant abishou series adhesive film. With the advent of new battery technology, hjt / TOPCON preferred Poe, and HPBC put forward new requirements for the production process of adhesive film. The company has sufficient product reserves and superior process, expanded the production of 250 million flat needles, improved the differentiation of adhesive film and continuously improved the profit structure.
The sales volume of back sector increased steadily and the structure of photosensitive dry film was optimized: the sales volume of back sector in 2022q1 was 28 million square meters, with a month on month ratio of + 87% / + 33%, mainly due to the growth of back sector driven by distributed demand and the increase of production capacity. It will still grow rapidly in 2022, with a production capacity of 22 million Ping / month at the end of the year. We expect that the annual shipment will exceed 100 million Ping. The sales of photosensitive dry film 2022q1 reached 24 million square meters, an increase of 9% at the same time. Since the epidemic, the PCB industry has been under great pressure, and the company has improved against the market. We expect to ship 130150 million square meters throughout the year, an increase of 30% – 50% at the same time. The production expansion of 400 million flat photosensitive dry film and 614500 tons of synthetic resin in Jiangmen base will be gradually promoted, and the scale effect + self supply of core raw materials will also promote the gross profit margin to further increase. New materials such as FCCL, aluminum-plastic film and water treatment film will also continue to contribute to performance increment in the future.
Profit forecast and investment rating: Based on the rise in raw material prices, we lowered the company’s profit forecast. We estimate that the net profit attributable to the parent company from 2022 to 2024 will be RMB 2.7/36/4 billion (the previous value is RMB 2.9/36/4.3 billion), with a year-on-year increase of + 25% / 30% / 19%. We give 40xpe in 2022, the target price is RMB 115, and maintain the “buy” rating.
Risk tips: competition intensifies, policies are less than expected, etc.
