Report guide
Drawing air cushion material is a new strategic material of sporting goods track, the company takes the lead in achieving domestic breakthroughs in this field and is in the leading level in China. After this investment, the production capacity bottleneck will be broken, and the performance is expected to increase in the next three years.
Main points of investment
The domestic promoters of wiredrawing air cushion materials are mainly sporting goods downstream, and in terms of strong market space, wiredrawing air cushion materials are important semi-finished materials for sporting goods such as paddling boards and yoga mats with superior performance. and can be extended to rescue, national defense, agriculture and other fields, with a broad market space, China is expected to achieve a compound annual growth rate of 15% in the next five years, the global market capacity will reach 1 billion US dollars in 2020.
In terms of competition pattern, the company took the lead in breaking through import dependence in 2012 and is the first manufacturer to mass produce wiredrawing air cushion materials in China. According to our estimates of national output and business scale of major competitors, the company currently accounts for about 1/3 of the domestic market share in this subdivision field. After years of market verification, the company's products have a good reputation in the industry and establish stable relations of cooperation with many high-quality customers.
In terms of the company's technological advantages, the company continues to develop independently and introduce digestion and re-innovation, has 21 independent intellectual property rights, and grasps the core technology of the whole industry chain. it has strong technical advantages in the two core links to distinguish the quality of products, namely, the weaving of base cloth and the fitting of finished products.
Production capacity has entered a bottleneck period, and it is high time to raise funds to expand production. In the next three years, the performance will be expanded through the separation of the volume and price of the company's wiredrawing air cushion materials, we can see:
In terms of output and sales volume, the sales volume and output of wiredrawing air cushion materials have doubled in the past three years, and the production and marketing rate and capacity utilization have been close to or more than 100%. The existing capacity is no longer enough to support the company to undertake more orders. On the other hand, the company's IPO fund-raising will increase the production capacity of wiredrawing base cloth by 4.5 million square meters, which is expected to be put into production after three years, and the company's market share is expected to increase greatly.
In terms of price and cost, the unit price of the company's wiredrawing air cushion material has dropped from 93.8 yuan to 65.6 yuan in recent years, and the gross profit margin has dropped from 56.6% to 53.8%. The decline in the unit price of products is mainly due to: 1) the decline in the cost of raw materials, in which the purchase price of polyester industrial filament, which accounts for the highest proportion, dropped from 12.6 yuan to 7.7 yuan. 2) the proportion of self-production of drawing base cloth increased from 30% in 2018 to 91% in 2020, because the manufacturing cost of self-production is 5-6 yuan / square meter lower than that of outsourcing production, so the company's manufacturing cost has dropped significantly. The company adheres to the market-oriented route in pricing and strives for a larger market share in maintaining reasonable profits. The reduction of unit price is not the performance of the decline of the company's product power.
Gradually fade out of the low-end product market, profit margins still have room to rise at high levels. According to the gross profit margin of the product, the gross profit margin of the company's wiredrawing air cushion material, inflatable yacht material, cover material and light box advertising material is 50%, 50%, 30%, 20%, 20%, 10%, respectively. Among them, the technical threshold of light box advertising material is low, which is the company's low-end product series. In recent years, the company has shifted its focus to airtight materials with higher gross margins, while the share of revenue from light box advertising materials has shrunk from 12.9% to 1.3%. The optimization of the product structure will further increase the company's overall gross profit margin at the current high level of 43%.
Profit forecast and valuation
The company's core product capacity expansion has strong certainty, downstream demand is strong, and capacity digestion is guaranteed. It is estimated that the company's annual return net profit in 21-22-23 is 2.0gamma, corresponding to a growth rate of 90%, 24%, 28%, and a valuation of 20, 16, and 12X. As the domestic leader in wiredrawing air cushion materials, considering its high short-and medium-term performance release rate, future performance development potential and the company's excellent profitability, we believe that the reasonable valuation for 21 years is 28 times. For the first time, coverage gives a "buy" rating.
Risk hint
The promotion of capacity expansion projects is not as expected, the risk of rising raw material prices, and repeated outbreaks lead to insufficient demand downstream.