美瑞新材(300848)投资价值分析报告:高端TPU龙头 HDI启动二次成长

Meirui New Materials (300848) Investment Value Analysis Report: High-end TPU Leader HDI Starts Second Growth

中信證券 ·  08/03

The company is a TPU leader, positioned as a customized service for high-end products, and has strong profitability. In 2022, we began deploying upstream high-end isocyanate HDI and other products to achieve localized replacement of key high-end raw materials in the polyurethane industry, helping to increase performance significantly. Considering that the company is in a period of rapid growth, it was given 15 times PE according to 2024 results, corresponding to a target price of 25 yuan. It was covered for the first time and given a “buy” rating.

The company is a TPU leader, positions high-end products, and has a remarkable competitive advantage in differentiation. The company is a professional customized new material supplier in the domestic high-end TPU industry. It mainly produces thermoplastic polyurethane elastomers (TPU) and positions low-cost, differentiated high-end products. The company's founder team, with Chairman Wang Renhong as the core, has many years of technical and product experience in the isocyanate industry, which is a strong guarantee for the company's competitiveness. In 2022, the company raised no more than 235 million yuan in capital to actual controllers, enabling long-term development.

Integration lays out high-end HDI upstream, opens up markets with localized alternatives, and opens a secondary growth curve. HDI is known as the “jewel in the crown” of the polyurethane industry due to its superior performance and environmental advantages. It has a wide range of downstream applications, mainly high-end coatings. The HDI process is complicated, especially using highly toxic light gas. The barriers are extremely high. Worldwide, only Covestro, Conrui, Tosoh, Asahi Kasei, and Wanhua Chemical are produced. The company's first phase of the project with an annual production capacity of 100,000 tons is expected to be put into operation in early 2024, achieve localized replacement, and achieve self-sufficiency in key areas. As the localization of adinitrile hexanediamine accelerates, the company's cost advantage is remarkable, which is expected to help its performance increase significantly.

The TPU business invigorates the high-end market, and the rapid increase in volume and price supports growth. TPU has both the high elasticity of rubber and the high strength of plastic, and has various advantages such as easy processing, transparency, and aging resistance. It is used downstream in footwear, mobile phone cases, wearable devices, aerospace, medical tubes, etc. According to data from the China Business Industry Information Network, the compound growth rate of demand reached 10.42% in 2017-2021, and the high-end market still relies on imports. We conservatively expect the TPU market demand growth rate to be 7% from 2023-2025, with high-end demand growing at more than 10%. The company positions high-end products and has strong competitiveness.

Performance growth is high, flexibility is high, and valuations are attractive. Currently, the company's total TPU production capacity is 86,500 tons, and it is planned that 200,000 tons of additional production capacity will be released as needed in the future. We expect the gross margin of the TPU business to remain stable, net profit will increase slightly along with volume, and net profit of 144 million yuan in 2023. According to the company's announcement, at the beginning of 2024, additional HDI production capacity will be put into operation, and we expect to contribute 20,000 tons of production. Under the price neutral assumption, the net profit contribution will be 288 million yuan, and the incremental performance elasticity will be 154%.

Risk factors: The construction progress of the company's new projects is falling short of expectations; business competition is intensifying; macroeconomic growth is declining, product demand is insufficient, and the company's gross margin is falling; prices of major raw materials are fluctuating; inventory prices are falling; changes in the political and economic environment and trade policies in the countries and regions where overseas customers are located.

Profit forecasting, valuation and rating: The company is currently a scarce company in China whose main business is TPU business, and HDI gives it greater growth potential in the future. We forecast that the company's operating income for 2023-2025 will be 1,535/30.39/4.949 billion yuan, net profit to be 1.44/475/887 million yuan respectively, and the corresponding EPS forecast is 0.48/1.58/2.96 yuan, respectively. We selected Wanhua Chemical, a company with HDI and TPU business, Kangda New Materials, and Huitian New Materials, a company with downstream TPU applications, as comparable companies. Combining PE valuation and the PEG valuation method, the comparable company Wind unanimously expects an average PE of 16.3/12.2 times and an average PEG of 0.3 times in 2023/2024. Refer to the comparable company's valuation. Considering the strong growth of the company's new HDI business, we predict that the company's 2024-2026 annualized net profit growth rate will be 270%. Considering that the company's 2024 performance growth rate forecast is 6.9 times that of comparable company Wind's consistent forecast, based on the principle of prudence, the company was given a valuation premium of 23%. In 2024, 15xPE was given a target price of 25 yuan, covered for the first time, and given a “buy” rating.

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