Main points of investment:
The company's main products are polyurethane foam stabilizers, also known as foaming agents, which belong to fine chemical products. Uniform foaming agent is a key additive in the production process of polyurethane foam, which plays the role of emulsifying foam material, stabilizing foam and regulating foam cell. The main raw materials of the products are polyether, octamethylcyclotetrasiloxane, chloroplatinic acid, diethylene glycol and high hydrogen silicone oil, accounting for more than 80% of the company's main business costs. The products are widely used downstream, and the versatility of all kinds of polyurethane foams is small, so there are many kinds of leveling agents and strong pertinence, and their demand increases day by day with the increase of polyurethane foam consumption.
The industry is highly concentrated and technology promotes import substitution. The global suppliers of polyurethane foam stabilizers are concentrated in Europe and the United States, mainly multinational enterprises such as German win Chuang, American Maitu high-tech materials, air chemical industry and so on. However, the development of foaming agent in China started relatively late, and at present, hard foaming agent has basically achieved localization. Because of its high technical content, the market of soft foam homogenizer is still dominated by products of foreign enterprises, and the market share of domestic enterprises is rising rapidly. is breaking the monopoly position of foreign products. As a leading manufacturer of foaming agent in China, the company has been recognized and used by well-known enterprises such as Red Polaroid, Dow Chemical, Air Chemical, BASF, Bayer, Huntsman, Kuwait International Petroleum and so on.
Leading in the industry of hard foam leveling agent. In the field of hard foam homogenizer, the company has a production capacity of 15000 tons and is in a leading position in the industry, with a domestic market share of 21.01%, 18.31% and 17.27% respectively from 2014 to 2016. In 2016, the company's sales revenue of hard foam homogenizer reached 220 million yuan, an increase of 3.88 percent over the same period last year, accounting for about 80 percent of revenue, and product sales reached 9689.63 tons, an increase of 10.26 percent over the same period last year. In addition, the company plans to set up offices abroad to further improve the foreign marketing network market coverage and promote the export growth of hard foam homogenizer.
The share of soft foam leveling agent has a broad space to increase. The field of soft foam homogenizer is currently occupied by multinational enterprises, with a production capacity of 6000 tons and a domestic market share of 3.83%. In recent years, the sales revenue of soft foam leveling agent has increased rapidly, with a growth rate of 35.65%,-9.77% and 12.10%, respectively, from 2014 to 2016. In 2016, sales of soft foam leveling agents reached 2067.14 tons, an increase of 14.71 percent over the same period last year, mainly due to the development of more environmentally friendly new products to meet customer needs. We believe that the company's products have high technical content and stable quality, and have a large share of room for improvement in the market in the future.
Profit forecast and valuation. The company has a leading advantage in the domestic core technology field of foaming agent. With the gradual release of new production capacity and the replacement of import share, the market share will further increase in the future. We estimate that the company's EPS in 17-19 will be 0.77, 0.86 and 0.99 yuan, giving the industry an average valuation of 40 times PE over the past 17 years, with a target price of 30.8 yuan.
Risk hint. Production capacity is less than expected; the risk of a slowdown in downstream industries.