Based on the hot melt adhesive industry, multi-business resonance development: the company is the leader of the domestic hot melt adhesive industry, the existing hot melt adhesive production capacity of 35000 tons, the use of technical experience in the hot melt adhesive field to expand hot melt wall cloth, photovoltaic film, electronic adhesive and other fields, 450 million square meters photovoltaic film expansion project production progress is fast, is expected to release the full capacity in 2023. Standing at the current time, we are optimistic that the company will fully benefit from the increase in the existing business market share and the production capacity of the expansion project, and the company has a high long-term investment value.
Under the background of environmental protection substitution, the market share of the company's hot melt adhesive is expected to increase: the downstream of the adhesive covers wood processing, clothing, new energy, electronics and other fields, driven by the coordination of multiple demand, China's adhesive market space is growing steadily, with a demand CAGR of 5.3% from 2010 to 2020. The policy drives the VOCs of the adhesive industry to be more strictly controlled and encourages the development of high-end adhesives. the company's main products, hot melt adhesives, are non-toxic and environmentally friendly, which will fully benefit from the trend of environmental protection in the industry. In addition, the company has increased its R & D investment, and the CAGR of R & D expenditure in 2018-2021 has reached 30%. Continuous R & D investment and technological innovation will help the company to consolidate its leading position in the industry and deepen cooperation with customers.
Original four-layer hot melt wall cloth, marketing input into the harvest: as a high-end decoration material, wall cloth price is more expensive than wallpaper, latex paint, but has great advantages in construction and performance. From 2014 to 2020, the sales of wall cloth in China increased from 65 million square meters to 1.187 billion square meters, with CAGR as high as 62%. The four-layer hot melt omentum seamless wall cloth made by the company with its own hot melt adhesive production capacity and technology has significant advantages compared with other wall cloth products, and is expected to continue to seize the market share of the wall cloth industry in the future. In 2021, the company's wall cloth business has invested heavily in marketing channels such as storefront, online, live broadcast and so on. With the early investment entering the harvest period, the wall cloth business is expected to turn from deficit to profit, and the profit growth of superimposed production capacity is expected.
Expand photovoltaic film production capacity, give full play to category synergy and make a profit: the "carbon neutralization" policy drives a substantial increase in photovoltaic installed capacity, and we predict that the global photovoltaic film demand is expected to reach 2.1 billion square meters in 2025. The photovoltaic film industry has shown a competitive pattern of "one super and many strong" for a long time. Relying on the experience of hot melt technology, the company looks forward to the layout of the photovoltaic film industry for ten years. From 2017 to 2021, the company's photovoltaic film production increased from 14.01 million square meters to 26.7 million square meters, with a CAGR of 17.5%. The gap between the gross profit margin and the industry leader is rapidly narrowing. We believe that the company's rapid progress in expanding the production capacity of photovoltaic film, the completion of white film, PET, POE film product array, superimposed scale effect, photovoltaic film business is expected to drive a new round of growth of the company.
Profit forecast, valuation and rating: the 22-24 year net profit of the company is expected to be 1.04,2.54 and 286 million yuan respectively, and the EPS is 0.31,0.76 and 0.86 yuan per share respectively. The main business of the company fully benefits from environmental protection substitution, the wall cloth business has entered the harvest period, and there are broad prospects for the growth of photovoltaic film business. We give the company 23 years 20 times PE, corresponding to the target price of 15.27 yuan, covering the company for the first time and giving the company a "buy" rating.
Risk hint: raw material price fluctuation risk, new capacity put in less than expected, photovoltaic demand is not as expected.
