The company is a leading domestic high-end epoxy resin enterprise, the current epoxy resin industry prosperity upward, the company is expected to benefit; in the medium to long-term carbon peak, carbon neutralization background, the rapid development of the wind power industry, will greatly increase the epoxy resin demand space; extend to the lower reaches of the industrial chain copper clad laminate field, further improve profitability; continue to expand production capacity and further move towards high-end, optimistic about the company's long-term development.
China's leading high-end epoxy resin leader will benefit from the upward prosperity of the industry. At present, the company mainly produces high-end electronic-grade epoxy resin products with large import substitution space. Recently, the supply side of the epoxy resin industry is greatly affected by the double control of energy consumption, product prices continue to rise, and profitability increases significantly. With the advent of the downstream demand season, it is expected that the relationship between supply and demand will tighten, and product prices are expected to rise further. The company has a total production capacity of 155,000 tons of epoxy resin per year, which will fully benefit from the increase in product prices.
The wind power industry has ushered in a period of rapid development, which will greatly increase the demand space for epoxy resin. Wind power blade is an important application field of epoxy resin. In 2020, China's wind power installed capacity 71.7GW increased by 179% over the same period last year. Under the background of carbon peak and carbon neutralization, China's wind power industry ushered in a period of rapid development. According to research by international authoritative institutions, if net zero emissions are achieved in 2050, the annual installed capacity of 280GW wind power will be increased by nearly 200% compared with 2020, which will greatly increase the demand space for epoxy resin market.
Extend to the field of copper clad laminate in the lower reaches of the industrial chain to further improve the profitability of the company. Copper clad laminate is the core substrate of PCB. In recent years, the global copper clad laminate industry has gradually transferred to Chinese mainland. It is expected that China's rigid copper clad laminate market will grow to 83 billion yuan in 2026, with an average annual growth rate of about 7%. Copper clad laminate is the downstream of electronic grade epoxy resin, and the company entered this field through epitaxial acquisition in 2020, which effectively strengthened the industrial coordination. The company's existing copper clad laminate production capacity of 1440 million sheets / year, semi-curing sheet production capacity of 2880 million meters / year, has a good relationship of cooperation and brand image with high-quality customers, laying a solid foundation for the sustainable development of copper clad laminate business.
Continue to expand production capacity and further move towards high-end, optimistic about the company's long-term development. In July 2020, the company completed the acceptance of the 75,000 tons / year epoxy resin expansion project, and planned to build a new liquid epoxy resin production capacity of 140,000 tons / year; in August 2020, the Wuxi Hongren second phase copper clad laminate project of 7.2 million sheets / year and semi-cured sheet 1440 million meters / year was completed and put into production. At present, the company's high-frequency high-speed 5G circuit board resin and copper clad laminate development project is progressing smoothly, and the production and application in the field of high-frequency and high-speed products will be further broadened in the future. After the integration of Wuxi Hongren and listed companies, the two sides have accelerated the progress of research and development of high-end materials and are optimistic that the company will become bigger and stronger.
Give a "highly recommended-A" investment rating. It is estimated that the return net profit of the company from 2021 to 2023 is 501 million yuan, 640 million yuan and 802 million yuan respectively, EPS is 0.55,0.71 yuan and 0.89 yuan respectively, and PE is 17 times, 13 times and 10 times respectively. Coverage for the first time, giving a "highly recommended-A" investment rating.
Risk tips: falling product prices, raw material price fluctuations, the release of new capacity is not as expected.
