Overview of events
On July 15, 2023, the company issued a semi-annual report performance forecast that the company turned from losses to profits in the first half of 2023 and expected to achieve a net profit of 32 million yuan to 35 million yuan, compared with the same period last year, with a year-on-year + 318.10% income of 338.55%. After deducting non-recurring profits and losses, the net profit is expected to be-6.931 million yuan to-9.931 million yuan, compared with the same period last year.
On July 20, 2023, the company announced that it intends to use its own or self-raised funds to acquire 100% equity in Shanghai Jingliang New Materials Technology Co., Ltd., a wholly-owned subsidiary of Beijing Kangda Shengli Technology Co., Ltd.
Analysis and judgment:
The price of raw materials has fallen sharply, and the performance of the adhesive sector has benefited.
According to the company announcement, the company's return net profit in the first quarter of 2023 is about-14.85 million yuan, turning losses into profits in the first half of the year, achieving a return net profit of 32 million yuan to 35 million yuan, mainly due to the acquisition of Chengdu Saiying technology negative goodwill of 44 million yuan. Since the first half of the year, the price of raw materials for the main products of the adhesive plate of the company has shown a downward trend, which is conducive to the recovery of adhesive profits. According to Baichuan data, as of July 17, 2023, the prices of epoxy resin (East China) and bisphenol A (East China) were 1.4 million yuan and 10 million yuan per ton respectively, down 2.62 yuan and 20 million yuan per ton from last year's highs of 4.02 yuan and 30,000 yuan per ton, respectively. In 2023, the average prices of epoxy resin (East China) and bisphenol A (East China) in the first half of the year were 1.46 and 0.96 million yuan per ton, respectively, which were-34% and-34% respectively compared with last year. At the same time, the company actively reduces costs and increases efficiency, optimizes operational efficiency, and constantly improves profitability, so that the operating performance of the adhesive plate is expected to increase compared with the same period last year. We believe that with the shock and decline of crude oil prices in the future, the company's raw material prices have room for further decline, and profits are expected to continue to improve.
With the rapid development of assembly market, the market space of epoxy structural adhesive is huge. From the point of view of the downstream market application of adhesive, the market of assembly industry based on consumer electronics, photovoltaic and wind power is growing rapidly, leading the growth trend of the industry. As an important strategic support for the transformation of China's energy structure, under the trend of cost reduction of wind power, the installed scale of offshore wind power will continue to grow at a high speed. According to the data of the National Energy Administration, China's new wind power installed 37.63GW in 2022, with a cumulative installed capacity of 365.44GW; according to the World Wind Energy Association, the annual installed capacity of wind power in China is about 60GW-70GW from 2023 to 2025, of which the installed capacity is expected to reach 80GW in 2023, while offshore installation will return to 8-10GW level, and offshore wind power will exceed 25% in the next 10 years. Structural adhesive for wind power is the main material that affects blade mechanics and structure, and accounts for only 11% of the material cost of wind power blade. According to the New Materials Industry Alliance, 1GW wind turbine blades are expected to consume 700 tons of structural glue. We estimate that by the end of 2026, the cumulative installed capacity of wind power in China is expected to reach 635GW, and the market demand for epoxy structural adhesive is expected to exceed 420000 tons.
Acquire crystal material technology and actively create a comprehensive platform for new materials
According to the company announcement, by the end of 2022, the company has a production capacity of 466 million tons of epoxy structural adhesive per year, with a market share of more than 60%, and is in an absolute leading position.
In addition, the company is actively building a comprehensive platform for new materials on the basis of its main business. According to the company announcement and investor relations activity record table, since January 2018, the company has acquired or participated in Chengdu must Control Technology, which mainly develops electromagnetic compatibility systems, Hebei Weixin Technology, which is engaged in ITO (indium tin oxide) target business, and Caijing Optoelectronics, which is engaged in LCD business. On March 23, 2023, Kangda Xincai announced that it had delisted its 100% stake in Saiying Technology with 178 million yuan, mainly engaged in the whole machine radar business, and realized the extension of the company's industrial chain in the military electronic technology sector. According to the record table of the company's customs activities, in the first stage, the company will further integrate the technical R & D and market channel resources in the fields of electromagnetic compatibility, power module, tantalum capacitor, MLCC, microwave electronic system, etc., to form a complete industrial chain from the component level to the system level and the whole machine level. The products of crystal material technology to be acquired by the company in the near future are mainly used in the manufacture and packaging of electronic components and circuit modules of low temperature co-fired ceramic technology (LTCC), which can meet the needs of both military (active phased array radar, electronic countermeasures, etc.) and civilian fields (5G mobile phones, 5G mobile terminals, 5G routers, 5G base stations, new energy vehicle electronic circuits, etc.). Its ceramic raw materials tape and other products break the foreign technological monopoly. It has realized the import substitution and filled the domestic gap.
Investment suggestion
Due to the structural weakening of downstream demand for some of the company's products since the beginning of this year, we adjusted our previous profit forecasts and estimated that the company's operating income from 2023 to 2025 will be 2.331 billion yuan respectively (previously 40.18 yuan 52.02 billion yuan), and the net profit of homing mother will be 2.14 billion yuan 3.57 / 435 million yuan respectively (previously 2.40 / 37854 million yuan respectively). EPS is 0.70 PE 1.17 PE 1.42 yuan (previously 0.79 Universe 1.24 Universe 1.49 yuan), corresponding to the closing price of 14.01 yuan on July 27, 2023, which is multiple of 20-12-10, maintaining a "buy" rating.
Risk hint
The risk of raw material price fluctuation; the risk aggravated by market competition; the risk that the installed capacity of wind power is less than expected; the acquisition schedule is not as expected.