The cost pressure is gradually released, the new production line continues to contribute to the increment, maintaining the "buy" rating Yongguan New material is the leading enterprise in the domestic tape industry, benefiting from the decline in raw material prices and sea freight, the cost end pressure is gradually released, the new production line of Jiangxi base is expected to continue to contribute increment during the year, with the increase in the share of traditional belt field and the volume of industrial products such as automobile / degradable tape, we are optimistic about the company's continued growth. Taking into account the relief of pressure on the cost side and the contribution of the new production line, we raised the company's EPS forecast for 22-24 to 1.95 EPS 2.62 EPS 3.30 yuan (the previous value 1.74 pound 2.40 PE), combined with the valuation level of the comparable company (an average of 24 times PE for 22 years), considering that the comparable company's main business includes new energy related business, and the company's current new energy sector layout is less, giving the company 22 years 20 times PE. The target price is 39.00 yuan (the previous value is 27.84 yuan, based on 22-year 16xPE), maintaining the "buy" rating.

Raw material prices and sea freight downward, the company's cost-side pressure relief is limited by the rise in substrate / resin / energy prices and high sea freight, the company's 21Q2-22Q1 net interest rate continues to be under pressure, while according to Baichuan Yingfu, as of July 22, the average price of tape raw material PP/PVC/ butyl acrylate / pulp 22Q3 is 0.84 pound 0.67 million yuan / ton, month-on-month-4% balance 22% 17% impulse 1.5%. The price of PP/PVC/ butyl ester has continued to decline since June. According to the MacroMicro,7 freight index from Asia to the United States / Nordic / Mediterranean on April 22, the price index fell 57%, 19%, 7% from the beginning of April. We expect that the company's cost-side pressure will be significantly improved, and the sea freight will be better for the company's export delivery and overseas prices. Taking into account the easing of cost-side pressure in 22Q2, we expect the company's 22Q2 performance to improve month-on-month, while 22Q3 begins to benefit from significant cost improvements and corporate integration advantages, and net interest rates are expected to continue to recover.

There are three new BOPP production lines in 22 years, and the increment is expected to be gradually realized. According to the company's 21 annual report, the company's BOPP film drawing machine will add 3 production lines in 22 years, of which: Shandong production line has been trial run in February, we expect to be in a full open state; Jiangxi second line and Shandong second line will be put into production in 22H2, and the production capacity of three new BOPP production lines will all reach the post-natal company BOPP production capacity will be tripled at the end of 21. According to Baichuan Yingfu, as of July 22, although the BOPP-PP price difference has fallen from the 21-year high, it still maintains a level of more than 2000 yuan / ton. The average gross profit of BOPP film drawing film is about 906 yuan / ton, and the profit is good. We expect that the new production line of BOPP will continue to contribute to revenue increment, and the advantage of scale is expected to be highlighted, which will also help to enhance the company's cost competitiveness and net interest rate.

Traditional tape and new categories continue to develop, and the advantage of industrial chain integration gradually shows the traditional tape. The continuous growth of express business volume will lead to an increase in demand, while the demand for food packaging downstream of BOPP is rigid. Due to the impact of rising prices of raw materials and epidemic situation in the past 21 years, the share of small enterprises has shrunk and the income of the head enterprises has continued to grow. The company distributes auto harness / degradable / pharmaceutical / consumer electronics and other high-end tape. With the relief of the epidemic in Shanghai, we expect the harness tape business to recover significantly. 22-23 is the period of concentrated release of new production capacity. 22Q1 is under construction of 820 million yuan, along with IPO and convertible bond raising projects have been put into production one after another, the advantage of scale has been enhanced, and the volume of high value-added products will also increase profits.

Risk hint: the risk of substantial fluctuations in raw material prices and the risk that the production of new projects does not meet expectations.