Sword points to the world's leader in sedimentation silica

The company has focused on R&D, manufacturing and sales of precipitated silica for many years. It has now become the largest supplier of precipitated silica in Asia and the third in the world. The company's industrial chain extends upstream and downstream. Currently, it has built a complete industrial chain from raw materials such as sulfuric acid and sodium silicate to the final product silicon dioxide. Product applications cover various fields such as rubber industry, feed, silicone rubber and toothpaste. The company has a global vision and is actively deploying production capacity at home and abroad. As of 2022, the company has a production capacity of 330,000 tons/year of silica.

The production capacity of the company's two phase 25,000 tons/year in Thailand and 75,000 tons/year of high-dispersion silica projects in Shaxian County, Fujian has been gradually released, and competitiveness is expected to be strengthened.

The green upgrade of the tire industry opens up space for white carbon black growth

The estimated consumption of white carbon black in 2015 was 3,348 million tons, and the global market is expected to grow at a rate of 5.0% from 2016 to 2025. In terms of value, the global white carbon banking industry's market size in 2018 was 5.22 billion US dollars. Due to the increase in demand for white carbon black in the rubber, plastics and other industries, it is predicted that the future growth rate of the industry will reach 8.6%. With the rapid development of domestic tire, shoe and other industries, the market size of white carbon black has also gradually expanded. In 2012-2019, the apparent consumption of white carbon black increased from 743,000 tons to 1,506,000 tons, and the CAGR reached 10.6%. Adding white carbon black to the rubber surface of tires can improve tire performance and reduce tire rolling resistance. The mileage anxiety brought about by new energy vehicles makes users have great demand for tires with low rolling resistance and low energy consumption. Under the impetus of the European Union, a number of regulations and industry standards on green tires have been introduced one after another, and countries around the world have followed suit. As a major tire country, China's dependence on foreign exports is as high as 40%. Overseas policies will reverse the green upgrade of domestic tires, boosting consumer demand for white carbon black. According to estimates, under the tire greening rate process, demand in the global high-dispersion white carbon black market is expected to reach 1,321 million tons in 2025. Compared with 2021, there is room for growth of more than 35%.

The barriers to high-end products are high, and they are gradually concentrated on leading companies

At the end of 2020, the white carbon black production capacity of domestic enterprises reached 2.655 million tons, while high-end products represented by high dispersion accounted for a relatively small share. In 2020, they only accounted for 24.5% of the total white carbon black production capacity. The precipitation method, in particular, highly dispersed white carbon black has high energy consumption and high technical barriers. Generally, the construction cycle for production expansion projects is 12 months or more, and the construction cycle for new construction projects is at least 24 months, making large-scale measurement difficult in the short term.

Integration has become a trend, and falling raw material prices have opened up profit space

Self-production of sodium silicate and sulfuric acid production of white carbon black by precipitation can reduce material costs by about 10%; in addition, preparing sulfuric acid waste heat to generate electricity can also improve energy efficiency. On the cost side, self-produced sodium silicate requires the use of soda ash. In the future, as domestic soda ash production capacity expands, its price is expected to continue to decline. Participating downstream demand is improving, and precipitation method white carbon black is expected to start a new boom cycle.

Quecheng shares: technology, industrial chain, and customers go hand in hand

1. R&D process advantages: The company and its subsidiaries have obtained 38 invention patents and 122 utility model patents. The patents cover professional production equipment, manufacturing technology and processes for silicon dioxide; 2. Advantages of the whole industry chain: The company's products cover silicon dioxide and its raw materials, sodium silicate, sulfuric acid, steam, electricity, etc., to reduce large production costs; 3. Customer first-mover advantage: Highly dispersible white carbon black has a long certification cycle, and the company has obtained certification from many domestic and foreign tire companies, and has formed good cooperative relationships.

First coverage: Give your child a “buy” rating

The company is the largest supplier of silica by precipitation method in Asia and the third largest in the world. The company's industrial chain extends upstream and downstream, and has now built a complete industrial chain from raw materials such as sulfuric acid and sodium silicate to the final product silica. With the continuous increase in the global tire greening rate and the release of the company's own production capacity, performance is expected to usher in rapid development. The company's net profit from 2023-2025 is estimated to be 490 million yuan, 580 million yuan and 690 million yuan respectively.

Risk warning

1. The investment of new production capacity falls short of expectations; 2. Downstream demand is weak; 3. Fluctuations in raw material prices; 4. Risk that profit prediction assumptions are not valid or fall short of expectations