Cash cow business with stable revenue and high profit margin
The company's traditional thermal magnetic ticket and magnetic stripe magnetic card business has stable revenue, and the net interest rate is as high as 40%. The ROE is over 20%. This business brings stable profits and ultra-high cash flow for the company, so the company's asset-liability ratio is low. Through years of technology accumulation and process precipitation, electronic materials are mainly particles, film-forming and coating technology, the company has the core technical capabilities of electronic material preparation.
Stress test film opens a new path for company growth
The downstream of the stress test film is mainly electronics, communications, communications, oral medical and other applications, the domestic market space is about 1 billion yuan, and maintain an annual growth rate of 10%. Due to the high technical barriers, Fuji City in Japan currently accounts for more than 80% of the market, and the gross profit margin of the products is more than 85%. The company's products are positioned as domestic alternatives, strategically starting from consumer electronics and communications, followed by the introduction of a higher-value automotive industry. At present, the new production line has been put into production, and the downstream customers of the company include Tianma, BOE, CLP Panda, Guoxian Optoelectronics, Youda Optoelectronics and other panel factories. The business is expected to start volume in 19 years, and the performance is flexible in the long run.
Domestic substitution of FPC raw materials for butt welding of EMI shielding materials and conductive adhesive films
EMI film and conductive adhesive film are raw materials for FPC production. In FPC raw materials, EMI film accounts for about 10-15% of BOM cost, and conductive film accounts for 3-5%. The market size of the two products is about 30 billion yuan, and the average net interest rates of the two products are 15% and 50%, respectively. The corresponding profit space is a total of 700 million yuan. The company's main competitors are Japan Tuozida, Toyo Komei and domestic Fangbang Electronics, three of which occupy more than 80% of the market. As newcomers, the company's products have entered the supply chain of downstream FPC enterprises such as Dongshan, Hongxin and Jingwang, and are expected to increase market share through performance-to-price ratio and services. FPC raw material related products will relay the pressure sensitive film business, become the driving force of the company's long-term performance growth, the company is committed to becoming a domestic supplier of electronic materials.
Profit forecast and investment suggestion
It is estimated that the company's performance from 2019 to 2021 will be 140 million yuan, 250 million yuan and 310 million yuan respectively, corresponding to PE 23X/13X/10X. The company has strong certainty of long-term performance growth, large product profitability and market space. We believe that domestic electronic materials are expected to gradually replace the share of Japanese enterprises, will fully enjoy the blue ocean market, and are optimistic about the company's electronic materials platform enterprises.
Risk hint: the intensification of product competition leads to a rapid decline in prices and slow customer breakthroughs.
