Main points of investment
The company is a leading supplier of copper clad laminate in China and has achieved rapid growth in recent years. Huazheng New material, founded in 2003, is one of the earliest enterprises engaged in R & D and production of copper clad laminate in China. The company was listed on the Shanghai stock market in 2017, and the high-frequency and high-speed materials were certified by well-known communication enterprises in 2018. In recent years, the company has achieved high-speed growth through the continuous production of Qingshan Lake Base, Zhuhai Base and other producing areas. From 2016 to 2021, the company's revenue CAGR was 24%, and the return net profit CAGR was 23%, achieving rapid growth. At present, the company has formed three major product systems of copper clad laminate, composite materials (including transportation and logistics composite materials, functional composite materials) and energy materials, of which copper clad laminate accounts for 74% of revenue in 2021, which is the company's main business. After the rapid growth of the company's revenue volume, the scale effect is obvious, and the cost rate decreases obviously. The combined expense rate of sales, management and finance decreased from 10.32% in 2016 to 6.61% in 2021, indicating the company's good ability to control expenses.
The market scale of copper clad laminate is huge, and there is plenty of room for the growth of domestic enterprises. Copper clad laminate is a special laminate specially used in PCB manufacturing, which undertakes the three functions of conductive, insulation and support of PCB, and is the core material of PCB. The domestic market size of CCL is expected to reach 86.4 billion in 2026, and the market scale is huge. At present, the technology of domestic enterprises is more mature on the traditional copper clad laminate. However, in the middle and high-end copper clad laminate market, especially in the field of special copper clad laminate technology with high added value, it is still monopolized by Europe, the United States and Japan, and there is still a certain gap between domestic enterprises and foreign-funded enterprises. High-grade copper clad laminate is the development direction of China's copper clad laminate industry. From the perspective of the global market, there are only two mainland manufacturers in the top 10 of the global scale. No matter from the market share or high-end, Huazheng new material copper clad laminate business still has a lot of room for growth. At present, the company's main products have been initially switched to high-grade copper clad laminate, and the new production capacity is the expansion of high-grade copper clad laminate.
The application prospect of aluminum-plastic film is broad, and the company makes great efforts to layout. The company's strategic new product aluminum-plastic film is the key material for lithium battery cell soft package packaging, which is mainly used in 3C digital, power, energy storage and other fields. With the rapid growth of shipments of power batteries and energy storage batteries, the rapid growth of overall soft package lithium battery shipments has led to a rapid increase in the shipping area of aluminum-plastic films. According to EVTank,2025 annual global aluminum film shipments are expected to reach 760 million square meters, 2021-2025 CAGR is expected to be as high as 27%. The company has an annual production capacity of 3600 million square meters of aluminum-plastic film, promoting the aluminum-plastic film products to further cover the field of power batteries from the original consumer electronics and light power fields.
Investment suggestion: the company's copper clad laminate business is expected to further increase market share through production expansion, there is still a lot of room for high-end products, and it is expected to return to the growth track in 2023. The aluminum-plastic film expansion project is smooth and is expected to fully benefit from the increase in shipments of new energy power batteries. We estimate that in 2024, the company will achieve revenue of 326,41.4 million and net profit of 0.73 million, and PE of 46 X / 23 X / 12X on January 11. Cover for the first time, giving the company a "buy" rating.
Risk tips: downstream demand is lower than expected, the risk of substantial price increase of raw materials, and the progress of production expansion is not as expected.
