The company is the largest silane coupling agent enterprise in China, and its core competitiveness builds a moat. Jianghan New material was established in Jingzhou, Hubei Province in 1998, mainly engaged in the production, R & D and sales of functional silane and other silicon-based materials, the main products are functional silane, including silane coupling agent and silane cross-linking agent, etc. downstream is widely used in composite materials, rubber processing, plastics, adhesives, coatings and surface treatment and other fields. After more than 20 years of deep ploughing in the industry, the company has formed a functional silane production capacity of 92000 tons, involving 14 series of more than 100 silane varieties. The company's silane coupling agent products have the first domestic market share from 2016 to 2021, ranking third in the global market share.
Looking at the scale of the company's historical operating income, we can find that its revenue center has risen twice in 2018 and 2021, and we believe that the growth mainly comes from capacity expansion. From 2013 to 2015, the operating income increased from 588 million yuan to 826 million yuan, and the net profit increased from 83 million yuan to 145 million yuan in the same period. After that, the operating income increased from 1.48 billion yuan in 2018 to 3.31 billion yuan in 2022, and the net profit increased from 330 million yuan to 1.02 billion yuan, with an average annual compound growth rate of 33.4%.
According to the company's disclosed data, the company's gross profit margin and net profit margin have been higher than the average of comparable companies since 2018; in the first quarter of 2023, the company's gross profit margin / net profit margin fell to 39.3% and 26.6% respectively from the high in 2022, compared with the company's average of 18.6% and 7.8%.
(1) Core competence 1: the product matrix is rich, showing the advantage of scale. The company has developed hundreds of silane coupling agents, with excellent product structure, numerous product models and wide layout. The rich functional silane product structure can avoid the high market risk caused by the single product and improve the company's product pricing power. (2) Core competence 2: research and development strength to build a technological moat.
After more than 20 years of technical precipitation, the company has completed more than 30 R & D projects since 2018, mainly related to the development of new silane coupling agents, process improvement of existing silane products, comprehensive utilization of by-products, and research and development of silane derivatives. As of 22H1, the company has 39 full-time R & D personnel, accounting for 4.1% of the total staff. Strong R & D strength and technical personnel build a high moat for the company. (3) Core competence 3: the export gross profit margin of the main products is higher than that of domestic sales, and the proportion of export sales of the company is significantly higher than the average level of comparable companies, so it is the main silane supplier of the leading tire enterprises in the world. The gross profit margin of export of the company's main products is generally higher than that of domestic sales by 5-15pcts. At the same time, the proportion of export sales of the company from 2019 to 2022 is 51%, 48%, 56%, 58%, significantly higher than the average level of comparable companies. (4) the company has strong internal circulation ability, realizes trichlorosilicon self-sufficiency, and further forms a complete green industrial chain.
Earnings forecast and valuation: combined with the changing trend of the market price of functional silane in the company's main business, we expect the performance to decline in 2023 compared with the same period last year, and with the gradual release of the company's investment project capacity in the next few years, the company's business is expected to maintain steady growth. It is estimated that the operating income of the company in 2023 to 2025 is 36.28,42.42 and 4.752 billion yuan respectively, and the net profit of returning to the mother is 8.58,11.10 and 1.295 billion yuan respectively. According to the current total share capital of 373 million shares, the corresponding EPS is 2.30,2.97,3.47 yuan respectively. Combined with the company's three core competencies, it will give the company 20 times PE in 2023 with a target price of 46 yuan, covering it for the first time and giving it a "buy" investment rating.
Risk hints: raw material price fluctuation risk, market competition intensification risk, product export risk, energy conservation and environmental protection policy risk, fund-raising investment project risk, short-term stock price fluctuation risk