Investment tips for this issue:

AHP score - After excluding the liquidity premium factor, Wanfeng shares scored 1.52, which is 20.3% of the total score.

Wanfeng shares will be quoted and listed on the main board on April 21. After excluding the liquidity premium factor, we estimate that Wanfeng Co., Ltd.'s AHP score is 1.52, which is at the 20.3% level of the total score of the AHP model for non-science and innovation systems, which is at the upper downstream level. After considering the liquidity premium factor, we estimated that Wanfeng Co., Ltd.'s AHP score was 2.02, which is at the 30.6% point of the total score of the AHP model for non-science and innovation systems, which is below the midstream level. Assuming an 80% finalist rate, under neutral expectations, the placement ratios of Wanfeng Co., Ltd.'s online placement targets in categories A and B are 0.0141% and 0.0066%, respectively.

The products are used in well-known brands at home and abroad, and field service teams are set up to enhance customer stickiness. In 2019-2021, the company ranked in the top ten in the national disperse dye industry ranking. The disperse dyes that can be produced cover hundreds of disperse dye products from various series such as high-water wash series, special series, and conventional series. Among them, high-fastness series disperse dyes are the company's key products, which have been widely used in well-known sportswear brands at home and abroad, including Anta, Li Ning, Adidas, Nike, etc. At the same time, the company is equipped with technical support personnel to provide on-site service in the main sales areas, which can guide customer product applications in a timely manner, provide timely feedback to the company on customer needs and market changes, and establish healthy interaction.

Core technology helps business development, and has the advantages of clean production to guarantee the company's operation. The company has formed a series of advanced core technologies. Among them, the company applied a self-developed catalytic system to achieve high selectivity for alkylation of aromatic hydrocarbon intermediates, effectively reduced the production of by-products and increased the purity and yield of products; using continuous flow nitrification reaction technology, the intrinsic safety of nitrification production was achieved, and the production capacity of production equipment per unit volume increased exponentially. Furthermore, the company continues to invest heavily in environmental protection, and 100 products have been certified by Bluesign. In the context of increasing national environmental policy requirements, the company can meet the environmental protection requirements of various aspects at home and abroad, thereby maintaining stable and continuous production, providing a stable guarantee for the company to develop domestic and foreign markets, maintain old customers, and respond quickly to market demand.

Benefit from domestic substitution of high-end dye products. In recent years, China's printing and dyeing industry has been transformed and upgraded. The entire industry has entered a stage of deceleration and efficiency from rapid growth to high-quality development. In 2021, printing and dyeing cloth production was 60.581 billion meters, an increase of 15.39% over the previous year. Production reached the best level in nearly ten years. In recent years, the textile and garment industry has met the diverse needs of consumers, gradually upgraded the industry, and launched various new fiber and blended fabric products. Corresponsively, the development and production of high-end dyes will be the focus of development. Although the regular middle and low end dye market is in high demand but the phenomenon of homogenization is serious, China's middle and high-end disperse dye market is dominated by international companies such as Huntsman Group and Desida. The company's middle and high-end disperse dye products compete with advanced enterprises with the advantages of being environmentally friendly, high fastness, and complete chromatography.

The company's performance was not as large as that of comparable companies, and net profit and gross margin continued to decline in 20-22. From 2020 to 2021, the company's revenue and net profit were not comparable, and 2022 revenue and net profit of Gimu were not as good as Zhejiang Longsheng's, but the compound revenue growth rate during the period was higher than Zhejiang Longsheng's. The company's net profit and gross margin declined year by year, but the gross margin in 2020 and 2021 was higher than the average of comparable companies, and the proportion of R&D expenditure was lower than the comparable average.

Risk warning: Wanfeng Co., Ltd. needs to be wary of risks such as increased market competition, fluctuations in upstream raw material prices, continued decline in gross margin, and decline in business performance