The company is a leading photoinitiator enterprise. under the general trend of light-curing materials gradually replacing solvent-based materials, the industry is developing rapidly. with the production capacity of fund-raising projects on the ground, the company is expected to open the growth space. We predict that the EPS of the company in 2019-2021 will be 0.77 PE 0.98 1.24 yuan. According to the growth of the company, we judge that 25 times is the reasonable valuation level of the company, give the target price 19 yuan, and give the "buy" rating for the first time.
The leading enterprise of photoinitiator has significant advantages in the whole industry chain. The company is one of the major manufacturers of photoinitiators in the world, including 907,369, TPO, 184, ITX, BMS, etc., with a production capacity of 2000 tons and other initiators of 1500 tons. The company is a rare enterprise with the production capacity of sulfhydryl compounds of photoinitiator raw materials, which ensures lower cost and higher product quality with the advantage of the whole industry chain.
The three major trends guide the development of the industry, and the direction of light-cured materials is clear. 1) the national control of VOC materials is stricter, solvent-based inks and coatings will quickly withdraw from the market, water-based energy consumption is high, and the future market will be replaced by light-cured materials. 2) downstream new application fields continue to emerge, and the UV-curing market is expanding rapidly. 3) the high-end photoresist market still needs to be developed. At present, the proportion of light-cured materials in the paint and ink industry is 8%, and the market scale of corresponding photoinitiators is 2.52 billion yuan. According to our calculations, assuming that the proportion of photocuring materials increases to 30% in 2028, the market size of photoinitiators is expected to expand to 15.59 billion yuan, corresponding to the future industry annual compound growth rate of 20%.
Raising and putting into production can expand the category and enhance the market share of Hengqiang. The first phase of the Inner Mongolia project under construction by the company will add 29000 tons of production capacity, with 14000 tons of end products except upstream intermediates, including 11000 tons of photoinitiators, including 3000 tons each of TPO, 1173 and 1173, 2000 tons of other photoinitiators and 3000 tons of pharmaceutical intermediates. With the gradual landing of the project, the company is expected to replicate the advantages of the 907 whole industry chain, realize the serialization and extension of photoinitiator products, increase the market share of photoinitiator, adjust the product structure and expand the production capacity of pharmaceutical intermediates. it is expected to significantly increase the performance of the company.
Risk factors: intensified market competition; product price fluctuations; capacity construction is not as expected; sudden environmental protection events.
Investment advice: the company is a leading enterprise of photoinitiator, and the industry is showing a trend of rapid development. With the gradual landing of fund-raising projects, the company is expected to open up growth space. We judge that the company's profit growth rate is expected to maintain more than 25% in the next three years. We predict that the company's EPS in 2019 and 2021 will be 0.770.98 EPS 1.24 yuan. Considering that the company's production capacity may have a certain impact on the market, according to the valuation of PEG, 25 times PE will be given according to PEG=0.9 in 2019, corresponding to the target price of 19 yuan, and the first coverage will be given a "buy" rating.
