Platform-based supplier of new materials, fully benefiting from the release of production capacity
The company is a national high-tech enterprise focusing on R&D, manufacturing and sales of advanced polymer materials.
Currently, products mainly include: 1) optical materials; 2) new energy materials; 3) information materials; 4) heat shrinkable materials. The company strives to build a platform-based supplier of new materials using liquid crystal displays, consumer electronics, photovoltaic new energy, automobiles, etc. as scenarios.
In 2021, the company achieved revenue of 5.931 billion yuan (year-on-year growth rate of 17.19%), net profit of 1,385 million yuan (year-on-year growth rate of 92.28%); in 2022 Q1, the company achieved revenue of 1,730 million yuan (year-on-year growth rate of 35.00%, month-on-month growth rate of 2.33%), and Guimo's net profit of 359 million yuan (year-on-year growth rate of 30.01%, month-on-month growth rate of -12.82%). With the smooth release of high-end optical films, the company's profitability increased markedly. When its peers experienced a decline in gross margin due to increased competition, the company went against the trend, and gross margin increased markedly, leading the industry.
Self-developed PET copper foil
Assuming a 19.8% global penetration rate of PET copper foil in 2025, we expect to generate 3.2 billion square meters of demand, corresponding to a market size of about 28.9 billion yuan. The company began setting up a PET copper box project in 2020, and development began in 2021. On the basis of a 4.5 micron substrate, major processes such as raw materials, master tape (magnetron sputtering), and water plating have been completed independently, and are progressing smoothly. After internal inspection of important indicators has passed, it has been sent to the customer for evaluation and certification. Currently, most domestic PET substrates are imported. The company has the ability to supply PET base films on its own, and already has sputtering equipment, which has technical first-mover advantages and cost advantages on the material side.
Whole industry chain technology helps PET copper foil production on a large scale
PET copper foil is currently in the early stages of industrialization and the cost advantage has not been reflected. The main cost reduction path is to dilute fixed unit costs by improving production efficiency and yield. The company has a full set of process technology from raw material development, extrusion and stretching, precision coating, magnetron sputtering, micromolding, electronic light carving molds, etc., and has technical product development advantages throughout the polyester film industry chain, which helps to increase the speed of large-scale production of 4.5 pMPET films, reduce costs, and improve product quality.
Investment advice
PET copper foil is on the eve of large-scale application. They are optimistic about the company's first-mover advantage of early loading and the ability of the entire industry chain to support large-scale production. At the same time, the launch of polyester film projects one after another has led to the release of profits, which has become the driving force for the company's continued growth in performance. The company's net profit/fixed assets reached 32% in 2021, higher than the industry average of 30%. With the release of production capacity, the hematopoietic capacity of the company's fixed assets will be further enhanced. As of July 18, 2022, the company's PE (TTM) was 17.85, significantly lower than the industry average of 27.07, indicating that the company may be underestimated by the market. The company is expected to achieve net profit of 1,834 billion yuan, 2,360 million yuan, and 2,921 billion yuan respectively in 2022-2024. Corresponding to the current PE of 14.29, 11.11, and 8.97, respectively, the key recommendations.
Risk warning
Demand in the photovoltaic and panel industries is slowing; there is a risk of fluctuations in raw material prices; production expansion projects fall short of expectations.