Company reviews
Short-term catalysis: adding equipment and proposing a one-stop solution for composite copper foil to support downstream customers to reduce costs and increase efficiency. On November 2, the company announced that it plans to add projects such as mechanical equipment research and development, special equipment manufacturing, and machinery and equipment sales to the scope of business. At the same time, the company stated on the investor interactive platform that the company's new special chemicals for composite copper foil electroplating have special design and configuration requirements for electroplating equipment. In order to provide supporting production equipment for the promotion of the company's new special chemicals for composite copper foil electroplating, provide downstream customers with one-stop technical solutions for composite copper foil manufacturing, and achieve cost reduction and efficiency for downstream customers, the company may develop R&D, production and sales of composite copper foil electroplating equipment.
In terms of equipment technology accumulation, the company currently has a core team and corresponding design plans.
Long-term logic: The advantages of the industry pattern are obvious, leading the domestic substitution of high-end products. The company's main products are electronic chemicals and general plating chemicals, and is a surface engineering technology solution provider. In terms of electronic chemicals, the industry has a high technical threshold and has been monopolized by foreign investors all year round. The company is a pioneer in promoting domestic substitution. The company's special chemicals for PCB level sinking copper and PCB chemicals for nickel and gold are at the same level of advanced level abroad, and it is actively expanding other product lines. In terms of general-purpose electroplating chemicals, the industry is transforming in the direction of park, environmental protection, and intelligence. The company has independently developed environmentally friendly surface treatment products such as cyanide-free and phosphorus-free, and has developed strategic cooperation with electroplating parks. At the same time, it is also actively promoting domestic substitution of some high-end products.
The company attaches importance to R&D innovation, increases investment in R&D, and strengthens external collaboration. Whether it's short-term breakthroughs or long-term achievements, the company's investment in R&D innovation is inseparable. The company invested more than 20 million yuan in R&D in the first three quarters of 2022, an increase of more than 50% over the previous year, accounting for 7.2% of revenue during the same period.
Meanwhile, in August 2022, the company announced that it intends to acquire 100% of the shares of Guangzhou Second Light Research Institute Co., Ltd. (“Second Light Research Institute”). The Second Light Research Institute is a professional research institute engaged in research and development of surface treatment technology. It is a well-known applied R&D institution in the industry. The acquisition has had a positive impact on enhancing the company's R&D capabilities, enhancing the brand image, and expanding the company's business. Furthermore, in order to introduce an external collaboration mechanism, an innovation consortium for collaborative development was established. The company set up the Sanfu Research Institute, set up an external consultant team, set up a joint experiment with Harbin Institute of Technology, established a “3+1" joint training mechanism with Guangdong University of Technology, and jointly promoted the upgrading and progress of the electroplating industry by maintaining close collaboration with the Electroplating Park to accurately serve the customer service market.
Investment advice
Combining the above short-term catalysis and long-term logic, we are optimistic about the company's future development and maintain the “Highly Recommended” rating. Although short-term performance is under pressure, we believe that in the long run, the company's business layout and R&D investment are expected to provide the driving force for the company's future performance growth. Due to the dilution of equity incentive expenses, we adjusted the profit forecast in the previous report. We expect the company's net profit for 2022/2023/2024 to be 3.74 million yuan/43.92 million yuan/162 million yuan respectively. Excluding equity incentive payments, the net profit corresponding to equity incentive payments is 80.74 million yuan/101 million yuan/175 million yuan respectively.
Risk warning
R&D and the transformation of results fell short of expectations, raw material prices fluctuated abnormally, domestic epidemics were repeated, etc.
