The Zhitong Finance App learned that Anxin International released a research report stating that maintaining Global New Materials International (06616)'s “buy” rating, believes that the acquisition of CQV is an important milestone, and will continue to explore the international market in the future. In the future, the company has multiple growth engines and is optimistic about its development prospects. Furthermore, it is estimated that the net profit forecast for 2023/24/25 is RMB 3.5/48/RMB 660 million, with a target price of HK$8. Additionally, the company announced on June 23 that it is discussing a possible business acquisition with an independent third party. The bank believes that this represents the firm determination of the company to continue expanding in the international market and is optimistic about its future development prospects.

Anxin International's main views are as follows:

Korea CQV is a leading global manufacturer of high-end pearlescent pigments.

Established more than 20 years ago, Korea CQV has created a product matrix of more than 800 models, focusing on pearlescent materials based on synthetic mica. It is the world's leading supplier of high-end pearlescent pigments in the automotive, cosmetics, and industrial fields. It has established extensive business cooperation with many well-known automobile brands, cosmetics brands, and industrial enterprises, and has significant advantages in sales channels for high-end products. According to the latest exchange rate, CQV2021/2022 revenue was RMB 22/250 million, up 8.2%/15.7% year on year, and net profit was RMB 0.19.03 billion, a year-on-year growth rate of -3.7% /53.2 billion yuan.

The advantages complement each other and move towards the international market.

The company and CQV have strong synergies: 1) Global New Materials has unique technical advantages in the field of synthetic mica. Currently, the synthetic mica production capacity is 1.2 tons, and the second phase of the 30,000 ton synthetic mica plant is under construction. It is expected that the first batch of 6,000 tons will be put into production in '24. The future production capacity will be sufficient, which can solve the bottleneck problem of raw materials for high-end CQV products. 2) The two sides complement each other in terms of products and sales channels, established a product matrix with more than 1,700 product models, covering the high and low end, and established a broad sales network at home and overseas, so that future products can penetrate each other. At the same time, CQV has alumina-based pearlescent pigment products, which are beneficial additions to the company's existing product range. 3) CQV can effectively utilize lower domestic raw materials and labor costs and significantly improve profitability.

It has been steady and steady, and performance continues to grow at a high rate.

Global New Materials has maintained a rapid growth trend over the past few years. In '22, revenue was 916 million, up 36.9% year on year, net profit was 236 million yuan, up 39.9% year on year, gross margin was 49.7%, and net interest rate was 25.8%. Despite the impact of the pandemic and the rise in raw material prices, the company has shown strong profitability. In the future, the company's growth will blossom more: 1) Phase II pearlescent pigment production capacity will be put into operation to release capacity bottlenecks and push the pearlescent pigment business to a new level; 2) the continuous implementation of synthetic mica in the field of new energy batteries is expected to form a second growth curve; 3) Further international business expansion is expected to increase market share through epitaxial growth and increase the company's leadership and voice in the industry.

Risk warning:Production capacity expansion fell short of expectations, industry competition intensified, macroeconomic downturn affected downstream demand, raw material costs rose, and mergers and integration efforts fell short of expectations.