Core point of view: the company ploughs hot melt adhesive materials, and its main products include functional adhesive film and functional polyolefin hot melt adhesive particles. After 2020, the photovoltaic boom promotes the rapid growth of production and sales of solar packaging film.
The company's 2021H1 photovoltaic film sales volume of 21.01 million square meters, under construction project put into production, the future photovoltaic film total production capacity will reach about 300 million square meters / year.
The downstream market is improving, and the company's revenue and profit scale are increasing. After 2020, the company gradually put into production, the downstream market of hot melt rubber particle business gradually improved, at the same time, the photovoltaic industry boomed to increase the sales of solar packaging film products, and the company's income and return net profit increased significantly compared with 2018-2019.
In 2021, the company achieved operating income of 1.693 billion yuan, + 67.39% compared with the same period last year, and realized a net profit of 113 million yuan, maintaining more than 110 million yuan for two consecutive years. 1Q22, the company realized operating income of 501 million yuan, + 65.01% year-on-year; net profit of 33 million yuan, + 12.06% year-on-year.
The overall production capacity of plastic film and hot melt rubber particles is growing rapidly. (1) Hot melt adhesive film: the total production capacity increased from 43.7 million square meters to 72.6 million square meters from 2018 to 2021, with an average annual compound growth rate of 18.44 percent. The production capacity under construction is 220 million square meters, and the company is expected to complete it in March 2023. (2) functional polyolefin hot melt adhesive particles:
From 2018 to 2021, the annual production capacity increased from 30600 tons to 70500 tons, with an average annual compound growth rate of 32.07%.
The production capacity under construction is 40,000 tons, and the company is expected to complete it by the end of 2023.
Solar cell packaging film business is developing rapidly. The company's solar cell packaging film sales increased from 28.9901 million square meters in 2018 to 38.3327 million square meters in 2020, with a compound annual growth rate of 14.99 percent; revenue increased from 209 million yuan in 2018 (27.27 percent) to 685 million yuan in 2021 (40.46 percent), and gross profit increased to 30.08 percent in 2021H1 from 19.59 percent in 2018.
The company actively promotes the construction of new projects, and after the project reaches production, the company's total photovoltaic film production capacity reaches about 300 million square meters / year. The company has strengthened its cooperation with Jing O, Jingke, BYD, Tianhe, Ates and other well-known component manufacturers, most of the new customers have cooperate in bulk to harvest landing orders, and some customers are in the process of certification.
Product photovoltaic industry boom, to promote the demand for film to maintain rapid growth. Under the "double carbon" goal, we expect the photovoltaic industry to usher in a business cycle. According to data from the China Photovoltaic Industry Association, it is expected that the world will add 270-330GW photovoltaic installations in 2025, with a compound annual growth rate of 12% and 18%. The high prosperity of the photovoltaic industry has led to the rapid growth of photovoltaic film demand. According to our estimates, the global demand for photovoltaic film is about 2 billion square meters in 2021 and is expected to reach 32-4 billion square meters in 2025.
Profit forecast and investment rating. We estimate that the return net profit of the company from 2022 to 2024 is 128 million yuan, 209 million yuan and 283 million yuan respectively, the EPS is 1.39,2.27,3.07 yuan respectively, and the BPS in 2022 is 15.61yuan. With reference to the valuation of comparable companies, the reasonable value range is given a reasonable value range of 62.55-65.33 yuan (corresponding to PB 4.0-4.2 times in 2022) according to the 45-47 times of PE in 2022, and the rating of "better than the market" is given for the first time.
Risk hint. The growth rate of photovoltaic installation is lower than expected, the price of raw materials fluctuates greatly, and the progress of projects under construction is not as expected.
Compliance Tip: according to the Haiyou New Materials 2021 report, Haitong holds more than 1% of the total equity of [688680 Haiyou New Materials], which is hereby disclosed.