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With the goal of promoting the localization of electronic chemical materials, the “platform-based” product layout has initially taken shape. On December 25, 2017, Juhua Co., Ltd. and 5 external investment institutions including Industrial Investment Fund, Yuanzhi Fuhai, Yingchuan Fund, Shengxin Fund, and Juyuan Juxin jointly established Zhongjuxin Limited to promote the development of the electronic chemical materials industry. The company is mainly engaged in R&D, production and sales of electronic wet chemicals, electronic special gases, and precursor materials. It is widely used in manufacturing processes such as cleaning, etching, and film forming in the fields of integrated circuits, display panels, photovoltaics, etc. Zhongjuxin focuses on the field of electronic chemical materials and is one of the few domestic enterprises that simultaneously produce e-wet chemicals, electronic specialty gases, and precursor materials.

Product technology is difficult and barriers are high, and the company continues to launch new products. The company's electronic grade hydrofluoric acid, electronic grade sulfuric acid, and electronic grade nitric acid have all reached G5 grade; in terms of electronic specialty gases, it can achieve mass production of 6N purity chlorine gas, 6N purity hydrogen chloride, and 5N purity hydrogen fluoride, mass production of 4N5 high purity hexafluorobutadiene, 4N-5N purity fluorocarbon gas, and 5N5 purity high purity tungsten hexafluoride; precursor materials can achieve HCDS, BDEMAS, and TDMAT with a purity of 6-7N, HCDS, and TDMAT, DS has been mass-produced, and BDEAS and TDMAT have sent samples to Huahong Wuxi; in addition, the company Research and development of functional electronic wet chemicals is being stepped up.

Revenue is increasing year by year, and the driving force for growth in the next few years is the expansion of old products and the continuous introduction of new products. Sales of e-wet chemicals and electronic specialty gases increased year by year in 2020, 2021, and 2022. Currently, the main revenue is also contributed by electronic grade hydrofluoric acid, electronic grade nitric acid, and electronic grade sulfuric acid from e-wet chemicals, and high-purity hydrogen chloride and high-purity chlorine of electronic specialty gases. Revenue for 2020, 2021, and 2022 was 40.181,900 yuan, 5657.956 million yuan, and 798.9958 million yuan, respectively, up 20.80%, 41.38%, and 41.22% from the previous year. Among them, e-wet chemicals accounted for 91.98%, 83.18%, and 81.36% of main business revenue, and electronic specialty gases accounted for 8.02%, 16.82%, and 18.60% of main business revenue. We believe that the company's growth in the next few years will mainly come from the continuous release of old products and the continuous launch of new products to contribute incremental revenue one after another.

The completion and commissioning of wafers and the continuous development of the OLED panel industry will drive the demand for electronic chemical materials to continue to increase. According to the China Research Network, citing data from the China Electronic Materials Industry Association, the total amount of wet electronic chemicals used worldwide in 2021 reached 4.583 million tons; the global electronic specialty gas market in 2020 was 4.19 billion US dollars, and 2025E is expected to exceed 6 billion US dollars, with a compound annual growth rate of about 7.5%; according to China's prospectus quoting QYResearch data, China's semiconductor front-body market will reach 590 million US dollars in 2021, and is expected to reach 1.156 billion US dollars in 2028E, a compound annual The growth rate is expected to be 10%. In the next few years, the main driving force for global demand for electronic chemical materials will come from the construction and commissioning of multiple fabs and the continuous development of the OLED panel industry.

Profit forecast and valuation suggestions: We predict that the company's 2023E-2025E revenue will be $964 million, $1,182 million, and $1,502 million respectively; net profit (after deducting non-prior) of $33 million, $59 million, and $86 billion, respectively. ①. The PS valuation method corresponds to the 6-12 month forward overall fair value range of RMB 4.626 billion to RMB 5.976 billion; ②, the DCF absolute valuation method corresponds to the overall fair value range of RMB 5.067 billion to RMB 6.892 billion for the 6-12 month long term. Combining the two methods, we believe that the overall fair value range for the 6-12 month long term of Zhongjuxin is 5.067 billion yuan to 5.976 billion yuan. According to the estimate in the prospectus, the number of new shares to be issued will not exceed 369.319 million shares and the total share capital is 147.276 million shares (excluding overallotment). The corresponding 2022 PS is 6.34x to 7.48x, and the corresponding 2023E PS is 5.26x to 6.20x. In the past month ending August 15, 2023, the static average price-earnings ratio for the computer, communications, and other electronic equipment manufacturing industry (SFC industry code: C39) announced by China Securities Index Co., Ltd. was 34.79 times.

Risk warning: risk that PS valuation is higher than comparable companies, technology development risk, technology authorization risk, no actual controller risk, customer certification risk, production safety risk, product quality risk, environmental risk, supplier concentration risk, agent sales model risk, subsidiary cash dividend risk, fixed asset investment risk, goodwill impairment risk, risk of impairment of goodwill, risk of loss of goodwill, risk that the overall gross margin of the main business is still lower than that of a comparable company in the same industry, risk of adverse effects on business performance, risk of adverse effects on business performance, functional electronic wet chemicals development and market expansion risk, fundraising Risk of digestion of additional production capacity in capital investment projects, business risks caused by various force majeure factors, etc.