Functional silane faucet, downward extension layout of high-efficiency thermal insulation and energy-saving material aerogel. The company is the leader of functional silane, deeply ploughing the functional silane industry for 20 years, with an industrial chain from trichlorosilane to functional silane.

In 2021, the company has a production capacity of 66000 tons of silane, and three major bases in Jiangxi Hukou, Ningxia Zhongwei and Tongling, Anhui have started to expand production at the same time. At present, the total investment of silane products under construction + proposed project is about 3.632 billion yuan. In addition, the company relies on the advantage of integration to extend the layout of the aerogel track downwards. due to the advantages of self-production of raw materials and circulation of auxiliary materials, the company has a strong cost advantage, and 335,000 square meters of production capacity is planned in the aerogel raceway. the investment in the capacity under construction of the aerogel business is expected to be 1.675 billion, which will become a dragon in the domestic aerogel industry after full production.

The silane industry where the company is located is a 10 billion-class market, and aerogel will usher in a golden period of development in the next 5 years. For the silane sector, the global output value of functional silane has exceeded 10 billion yuan, and global production capacity has grown at an average annual rate of 6.7% over the past five years. Due to the gradual transfer of the global silicon chemical industry chain to China, the domestic silane industry has grown at an average annual rate of 10% in the past five years. It is expected that with the rapid development of wind power, photovoltaic and other emerging industries, the domestic silane industry is expected to grow by more than 10%. For the aerogel plate, we expect the domestic aerogel market to be 19.7 billion in 2025, with the improvement of energy saving and carbon reduction demands of petrochemical enterprises and the improvement of battery safety requirements of new energy vehicles, we believe that aerogel will accelerate to replace traditional thermal insulation materials in the next five years, and silicon chemical enterprises represented by the company will significantly reduce the production cost of aerogel and usher in a golden period of development.

Cost is king, and the integrated layout shows the core competitiveness. Functional silane plate, the company invented gas phase chlorine cycle technology, with upstream trichlorosilicon production capacity, currently has 60,000 tons of trichlorosilicon, and under construction capacity of 260000 tons, integration advantage brings cost advantage. Aerogel plate, we think the company is the long-term winner of aerogel track: 1) in the short term, the company chooses the most mature carbon dioxide supercritical route, which will be the fastest to land and take the lead in the market. 2) in the medium term, the company will significantly reduce the cost of aerogel synthesis through the self-produced superimposed auxiliary material circulation technology of ethyl orthosilicate, which has a strong cost advantage. 3) in the long run, the company is currently the aerogel enterprise with the largest capacity planning, and the proposed production capacity ranks first in China, and it is the aerogel leader with the most potential.

Investment suggestion: the company has strong performance growth, the main business silane continues to expand production, the second curve aerogel opens the growth space. It is estimated that the company's revenue from 2022 to 2024 will be 21.77 million RMB 29.56, respectively, compared with the same period last year, which is + 28.3%, 35.8%, 38.1%, respectively, and the net profit from its home will be 694, 857, 1144 million yuan, respectively, and + 29.2%, 23.6%, 33.5%, respectively, compared with the same period last year, and the current share price corresponds to 12x10, 7x, respectively. According to the valuation level of the comparable company, we give the company 2023 14xP/E with a target price of 50.0 yuan per share, covering it for the first time and giving it a "strong push" rating.

Risk tips: silane industry capacity expansion is too fast; aerogel demand is not as expected; the company's aerogel production line is not as expected.