Main points of investment:
The company issued an annual performance forecast for 2021: the company expects the return net profit in 2021 to be between 345 yuan and 402 million yuan, an increase of 50% 75% over the same period last year, of which the impact of non-recurrent profit and loss on net profit is expected to be 38.52 million yuan. Based on this, it is estimated that the net profit of deducting non-return in 2021 will be between 307 and 364 million yuan, an increase of 69% 100% over the same period last year. It is estimated that the net profit of Q4 in a single quarter will be between 75-132 million yuan, the median net profit is about 104 million yuan (YoY+73%, QoQ+2%), the net profit after deducting non-return will be between 0.75-132 million yuan, and the median net profit after deducting non-return will be 104 million yuan (YoY+100%, QoQ+27%), which exceeds the market expectation.
The performance of pharmaceutical intermediates is outstanding, and active production expansion is expected to form a new growth pole: the company extends the business of pharmaceutical intermediates based on synthetic technologies such as liquid crystal monomers. Revenue reached 99.08 million yuan in the first half of 2021, a sharp increase of 43% over the same period last year. Since the second half of the year, with the surge in sales of some of the company's pharmaceutical intermediates due to strong demand from downstream customers, the revenue growth of the company's pharmaceutical intermediates business has further accelerated in the second half of the year, while the pharmaceutical intermediates have a high gross profit margin, driving the company's performance to grow faster than expected. The company has a variety of pharmaceutical intermediate production capacity, the production line flexibility can be adjusted to achieve flexible switching between different products, at the same time, the company is actively expanding production, pharmaceutical intermediate business is expected to become another growth pole after display materials, semiconductor materials, UV curing coatings.
Rapid release of photoresist, liquid crystal, semiconductor materials continue to grow: the company has a photoresist production capacity of 5000 tons / year, of which TFT positive photoresist sales rapidly, new product negative photoresist began to form large-scale sales after the second half of 2021. With the continuous transfer of downstream panel production capacity to China, the domestic demand for panel photoresist is expanding rapidly, and the company's photoresist business will accelerate its development under the background of domestic substitution. The company's liquid crystal business sales continue to grow, market share continues to increase, at the same time, single crystal self-sufficiency rate is expected to further enhance the company's cost competitiveness. At the same time, the company is one of the important suppliers in the field of semiconductor packaging materials in China, mainly providing customers with wet process chemicals (developer, etching solution, electroplating solution, stripping solution, etc.) and epoxy plastic sealing materials, tin balls, etc. With the sustained and rapid development of China's semiconductor packaging industry, packaging materials are expected to take the lead in the domestic semiconductor industry chain to achieve comprehensive domestic substitution. With the rapid growth of the domestic semiconductor market and the acceleration of import substitution, the company's semiconductor material business is expected to continue to develop rapidly.
The downstream demand resumes the steady growth of UV-curable optical fiber coatings, and new businesses such as automobiles and functional films are gradually opened: with the better control of the domestic epidemic situation, the fixed network and 5G construction of operators are on the right track. the company's shipments of UV-curable optical fiber coating materials have achieved restorative growth. With the development of 5G, data center, Internet of things and smart city, the company, as the leader of domestic optical fiber and cable paint, is expected to develop continuously and steadily in the future. At the same time, the company actively develops new applications of UV-curable materials in automobiles and functional films, which is expected to bring new growth points to the company's UV-curable coatings.
Investment analysis opinion: considering the higher-than-expected development of the company's pharmaceutical intermediates and other business, the company's 2021-2023 net profit will be raised to 3.70,5.13 and 657 million yuan (the original value is 3.28,4.12 and 510 million yuan), corresponding to PE 35X, 25x and 20x, maintaining the "overweight" rating.
Risk hint: new product market development is lower than expected; product price falls sharply