\u3000\u3000 Zhejiang Hailiang Co.Ltd(002203) (002203)
The net profit attributable to the parent company in 2021 is expected to increase by 60% - 80% year-on-year, maintaining the "buy" rating
The company released the performance forecast for 2021 and expected to realize the net profit attributable to the parent company of RMB 1.084-1.220 billion, with a year-on-year increase of 60% - 80%. The net profit attributable to the parent company in Q4 is expected to be between 161-297 million yuan, with a year-on-year increase of 19.3% - 119.7% and a month on month decrease of 46.3% - 23.6%. Due to the short-term impact of external environment such as power rationing and epidemic, we lowered the profit forecast for 2021 and maintained the profit forecast for 2022-2023. It is estimated that the net profit attributable to the parent company in 2021-2023 will be RMB 1.189 (- 1.19) / 1.722/2.447 billion, EPS will be RMB 0.60 (- 0.07) / 0.88/1.24 respectively, and the corresponding PE of the current stock price is 20.5/14.2/10.0 times respectively. Considering its low valuation and short-term external disturbance, we maintain the "buy" rating.
Due to the short-term disturbance of the external environment, Q4 performance fell month on month
In 2021, the global economic recovery momentum continued, and the recovery of downstream demand led to the recovery of demand for copper processing products. With the comprehensive application of the new generation production line technology, the company's business results have been continuously released. However, due to the power restriction since the end of the third quarter, some production lines in the coastal base have been greatly affected, or the delivery of orders has been delayed. Under the disturbance of the external environment such as repeated outbreaks outside China, the company's product sales may decline, resulting in the decline of Q4 performance month on month. We believe that "steady growth" is the primary task of China's macroeconomic goal for the whole year, and the downstream demand is expected to continue to pick up. In the context of the continuous liquidation of the current industry, the company, as a copper pipe leader, takes the initiative to adjust its strategy and optimize its own supply-demand relationship. The voice of the industry may be continuously strengthened, and the trend of performance growth returning to the right track will not change.
Firmly optimistic about the main line of capacity expansion + ton profit repair, cut into the copper foil track and add new growth highlights
We expect that the sales volume of the company's copper processing products will increase by 28% in 2022. By 2025, the scale of copper processing capacity will double that of 2021, and the compound growth rate from 2021 to 2025 will reach 23.7%. The company is expected to rely on the excavation of internal cost reduction space and the recovery of the bottom of industrial processing fees, so as to improve the ton profit of "price increase + cost reduction" and promote the performance to achieve the simultaneous rise of volume and price. In addition, the company has comprehensively cut into the lithium copper foil business with profound industry precipitation, with obvious late development advantages, adding new impetus to the long-term performance growth. We predict that the annual capacity of lithium battery copper foil will reach 50000 / 100000 / 120000 tons respectively from 2023 to 2025.
Risk tip: weak downstream demand of the industry; Supply clearing is less than expected; The progress of new projects is less than expected.
