Mengtai Hi-tech plans to issue convertible bonds. The company plans to issue convertible corporate bonds to raise no more than 300 million yuan, of which 210 million yuan will be used for the construction of 10, 000 tons of expanded continuous filament (BCF) and 5000 tons of fine denier stretch filament (DTY) technical transformation project, and 90 million yuan for replenishing working capital and repaying bank loans.
BCF and DTY have broad application prospects. BCF has been widely used in carpet materials, sealing materials, decoration materials and other fields because of its good fluffiness, soft feel, good coverage and other application properties. Carpets made of BCF are widely used in residential buildings, hotels, cinemas, cars, etc., and there is a huge demand in downstream areas. According to Lucintel's forecast cited in the Mengtai high-tech convertible bond prospectus, the market size of BCF will reach 12.3 billion US dollars by 2025, with a growth rate of 4 to 6 per cent between 2020 and 2025. DTY has the characteristics of light specific gravity, good air permeability, moisture conductivity and perspiration, so it is used in sportswear, underwear fabrics, home textiles and other fields. With the increase of sports population, China's sportswear market is growing rapidly. According to Euromonitor data, China's sportswear market grew from 190 billion yuan in 2016 to 387.1 billion yuan in 2021, with a compound average annual growth rate of 15.30%, bringing broad market demand for DTY.
The company has technical advantages in mass production of BCF and DTY. The company has promoted the research and development of multi-color and multi-size BCF fiber preparation technology and realized the mass production of BCF, has precipitated for many years in the differential fiber development and process continuous improvement of DTY, fully understood the project production process, mastered a complete set of process technology, and has a relatively perfect production management process. At the same time, the production line with international advanced level to be adopted in this project can provide equipment guarantee for the product quality of the project.
The company will make use of the ability of raising and putting into production to deepen its participation in the downstream enterprise supply chain. Fund-raising projects help the company to develop products that meet the needs of customers. For example, in the field of door and window sliver, customer products take FDY as the bottom cloth material and BCF as the fluff material, so there is a strong demand for cooperation with the company. The company will continue to improve the performance of BCF and DTY fiber, understand the cooperation willingness of customers at home and abroad, and open up new customers in the field of clothing manufacturing.
Profit forecast. We estimate that the company's EPS in 2022-2024 will be 1.14,1.26,1.48yuan respectively. Combined with the company's technological breakthrough in the field of lithium diaphragm new materials, we will give a certain valuation premium according to BPS 9.56yuan and 3.03.5times PB in 2022, corresponding to the reasonable value range of 28.68,33.46yuan, maintaining the "better than the market" investment rating.
Risk hint. The price of raw materials has risen sharply, the progress of projects under construction is not as expected, and the growth of downstream demand is not as expected.
