Functional silane integrated layout, the four bases go hand in hand, production capacity to maintain high-speed expansion. The company has been ploughing functional silane for more than 20 years, and the product matrix has been continuously enriched, which can be widely used in composite materials, rubber processing, plastics, adhesives, coatings, building waterproofing and surface treatment and other fields. In recent years, the company continues to expand production, reaching more than 15 products in 2021. At present, there are production bases in Danyang, Jiangsu and Hukou in Jiujiang, Jiangxi, and are promoting the construction of Tongling in Anhui and Zhongwei in Ningxia. If all the company's projects are put into production in the future, there will be more than 68 kinds of products and the production capacity of functional silane will reach more than 400000 tons.

Aerogel has entered the business cycle, and the demand for functional silane is growing steadily. With the continuous growth of the new energy industry and the gradual maturity of the fields of composite materials, coatings and surface treatment, the domestic downstream consumption of functional silane will grow steadily. According to SAGSI data, we expect CAGR to be 9.1% from 2021 to 2026. Aerogel has good thermal insulation performance, and can be used for pipe insulation, lithium battery insulation and external wall insulation. At present, there are a large number of aerogel entrants, with a planned production capacity of nearly one million square meters. With the promotion of aerogel scale and industrialization and the promotion of downstream use, the permeability will continue to increase. We expect that the size of the aerogel industry is expected to exceed 10 billion yuan in 2025, and some of the market size in 2021-2025 is CAGR or more than 50%. Aerogel will enter a high-speed growth channel.

The upstream and downstream extended layout constructs the cost advantage, and the aerogel planning capacity is the largest in China. The company has a production capacity of 60,000 tons of trichlorosilicon, which can meet the production needs of functional silane. At the same time, the company also continues to lay out the upstream, with a planned production capacity of 30, 000 tons and 320000 tons of metal silicon particles and trichlorosilicon. In the future, with the landing of upstream production capacity, the company's functional silane and aerogel cost advantages will be highlighted. Downstream, the company's aerogel planning capacity of 335,000 square meters, the largest in China. The company currently has a production capacity of 10,000 tons of tetraethyl orthosilicate, and has planned a production capacity of 60,000 tons of orthosilicate, which will further enhance the advantages of the company's aerogel business.

Investment advice. The company is a functional silane leader, continue to expand production to consolidate the industry position, extend the layout to the upstream and downstream industrial chain, open the aerogel second growth curve, profitability is expected to continue to improve. We estimate that the company's earnings per share from 2022 to 2024 are 2.83,3.35,4.58 yuan respectively, and the corresponding PE is 13,11 and 8 times respectively.

Risk tips: excess risk of functional silane; aerogel demand is lower than expected; company capacity construction is not as expected.