Jiuri new materials: photoinitiator industry leader, the mainstream series of large-scale production. The company is the largest and most comprehensive supplier of photoinitiators in China, with large-scale production capacity of more than ten kinds of photoinitiators, such as TPO, 1173, 907,369, DETX, ITX, etc., to achieve simultaneous production of the main photoinitiators in two factories to ensure customer supply stability and safety. The company's photoinitiator business market share is about 30%. In 2018, the company's mainstream varieties 184, 1173, TPO/TPO-L and TX series (ITX/DETX) accounted for 59.61%, 40.73%, 33.28% and 49.59% of domestic output, respectively.
Business performance has increased significantly, and R & D investment is in the forefront of the industry. The strict regulation of environmental protection has led to the withdrawal of some small production capacity, and the price of photoinitiator has risen sharply. In 2018, the price of photoinitiator products increased by 42.8% compared with the same period last year. The production and marketing of photoinitiator is relatively stable, and the profitability is significantly improved. In the first half of 2019, the company achieved operating income of 789 million yuan, an increase of 52.32% over the same period last year, a net profit of 181 million yuan, an increase of 116.12% over the same period last year, and a gross profit margin of 41.89% of photoinitiator, an increase of 6.08pct over the same period last year. The company's R & D investment shows a continuous growth trend. From 2016 to 2018, the company's R & D expenditure was 2535.43 yuan, 2895.92 yuan and 43.2009 million yuan respectively, accounting for 3.97%, 3.91% and 4.3% of operating income, respectively.
The trend of industry concentration is obvious, and the prospect of photoinitiator is broad. After more than a decade of full competition in the domestic photoinitiator market, the number of production enterprises has gradually decreased from hundreds to more than a dozen; the industry M & An integration has been promoted continuously, and the trend of concentration is obvious. Environmental protection promotes light-cured materials to gradually replace solvent-based inks and coatings, and UV coatings and inks have broad prospects. The global photoinitiator market reached US $797 million in 2017, and is expected to reach US $1.294 billion in 2023, with a compound growth rate of 8.5%. The market scale of light-cured formula products in China has a huge growth space, and the ratio of domestic UV paint output to paint output has hovered at 0.4%, 0.6% for many years, which is far lower than the international average of 2.8-3.2%. China's UV ink output in 2017 is 56100 tons, UV ink permeability is expected to gradually increase, domestic UV ink output is expected to reach 91700 tons in 2022. Although the practical application of UV adhesive is relatively late, it is expected to further infiltrate and develop in the fields of lamination, packaging sensitivity and assembly application in the future.
The fund-raising project helps the development of the company. The company plans to issue no more than 27.81 million shares and raise 1.395 billion yuan for the "construction project of light-curing series materials with an annual output of 87000 tons" and "the reconstruction project of light-curing technology research center". The main products of "87000 tons of UV-curing series materials construction project" include 27000 tons of photoinitiators (1173, 184,184, TPO, TPO-L, etc.) and 60,000 tons of monomers (TMPTA, TPGDA). The construction period of the project is 25 months, and the production capacity is gradually released after completion, and it is expected to reach full production during 2023-2024. After the project reaches production, the company's photoinitiator production capacity will reach 50,000 tons, which can meet 33% to 44% of the UV paint photoinitiator demand; at the same time, there is a strong cooperation between monomer and photoinitiator sales.
Profit forecast and valuation. We estimate that the operating income of the company from 2019 to 2021 is 15.71,17.79 and 2.055 billion yuan, and the net profit is 3.65,3.77 and 401 million yuan. In terms of valuation, we select A-share listed companies Yangfan new materials, strong new materials, Guangxin materials, Rongda photosensitive companies as comparable companies, the average PE valuation of comparable companies in 2019 is 35.45times, the median is 34.46times, the average PEG valuation is 1.25times, the median is 1.00times. Based on the valuation methods of PE and PEG, we think that the reasonable target market value of the company is 98.0-14.5 billion yuan. According to the total share capital of 111 million after the issue, the corresponding reasonable value range is 88.1-130.4 yuan, corresponding to 27-40 times of PE.
Risk tips: the prices of photoinitiator products and raw materials fluctuate greatly; the new production capacity of the fund-raising project digests the risk; the project progress is not as expected.
