Key points of investment

Next Monday (5/22), a company listed on the main board will purchase “Xiangteng New Materials”.

Xiangteng New Materials (001373): The company is mainly engaged in R&D, production, precision processing and sales of various thin film devices in the field of new displays. The products include polarizers, optical films and functional adhesive materials of various specifications, all of which are key components in the field of new displays. The company achieved operating income of 896 million yuan/1,293 million yuan/804 million yuan respectively in 2020 and 2022, YOY was 28.97%/44.30%/-37.83% in that order, and the three-year revenue compound annual growth rate was 4.98%; it achieved net profit of 61 million yuan/80 million yuan/62 million yuan. YOY was 28.27%/31.26%/-22.90% in that order, and the three-year compound annual growth rate of Fumo's net profit was 9.09%. In the latest reporting period, 2023Q1 achieved operating income of 145 million yuan, a year-on-year decrease of 50.11%; it achieved net profit of 10 million yuan to its mother, a year-on-year decrease of 37.12%. According to preliminary forecasts, the company expects to achieve net profit of 24.04 million yuan to 27.0 million yuan from January to June 2023, a year-on-year change of -38.85% to -31.21% compared to January-June 2022.

Investment highlights: 1. The company has long focused on the field of liquid crystal display film devices and has formed stable cooperative relationships with many leading LCD panel manufacturers. The company has been deeply involved in the field of liquid crystal display thin film devices for more than ten years. With its stable product quality and rich process technology, it has established good cooperative relationships with many leading LCD panel manufacturers and well-known companies in the industry chain, such as SDP, CLP Panda, BenQ Youda, Huike Co., Ltd., Zhongqiang Optoelectronics, Starline, Ruiyi Optoelectronics, and BOE. At the same time, with the continuous deepening of the cooperative relationship, the company's procurement share of the above customers has steadily increased. 2. The company actively expands new customers and new application segments. The number of the company's clients continued to grow between 2020 and 2022, with 116, 142, and 175, respectively. Specifically, in the field of polarizers, the company developed the polarizer OEM business for BenQ Materials' new client model project in 2022, and mass production and delivery began in January 2023. Up to now, the estimated number of orders for models with confirmed cooperation intentions is 8 million PCS-10 million PCS. In the same year, the company also signed a framework agreement with Shenzhen Nitto Optics to provide polarizer OEM for a series of products such as Pad. It is expected that cooperation can be formally launched in the first half of 2023. In terms of optical films, the company is actively expanding and gradually implementing fields with high added value such as automotive, mini LED, educational machines, e-sports, etc.; for example, the e-sports multi-layer composite brightener developed for Century United Innovation Smart Entertainment Media Co., Ltd. began small-batch trial production at the end of 2022, and mass production of automotive optical films developed for Gilead Display Components Co., Ltd. also began mass production in January 2023, etc.

Comparison of listed companies in the same industry: Guanshi Technology, Hanbo Hi-Tech, Jinfu Technology, Hengmingda, and Feirongda were selected as comparable listed companies for Xiangteng New Materials. Looking at the comparable companies mentioned above, the average revenue scale of comparable companies in 2022 was 2,078 billion yuan, the comparable PE-TTM (excluding negative values and the comparable company Feirongda/arithmetic average) was 29.82X, and the gross sales margin was 20.18%; in comparison, the company's revenue scale and gross margin average fell short of the average of its peers.

Risk warning: There is still a possibility that companies that have begun the inquiry process will not be able to go public due to special reasons; company content is mainly based on the content of prospectus and other public information; there is a risk that the selection of listed companies in the same industry is not accurate enough; there may be interpretation deviations in the selection of content data. The specific risks of listed companies are shown in the text.