Everbright Tongchuang is a scarce supplier of carbon fiber structural parts of consumer electronics in China. Under the guidance of the strategy of "deep customer service", the company successfully launched carbon fiber backplane products in 2020 and passed Lenovo Group Limited certification, breaking the exclusive monopoly of well-known materials companies in Japan. Under the trend of lightweight consumer electronics, carbon fiber composites are expected to continue to infiltrate into laptops and accelerate the introduction of folding screen mobile phones and VR/MR head display devices. We are optimistic about the development of the company's carbon fiber business, and it is expected that the rapid volume of new products will lead to the rapid growth of revenue and net profit in the future. The EPS of the company in 2023-2025 is expected to be 2.28pm 3.30max 4.42 yuan respectively. Considering the comparable valuation level of the company, as well as the company's first-mover advantage and technical reserve in the field of consumer electronics carbon fiber structures, the company will be given a "buy" rating of 30 times PE in 2023, corresponding to the target share price of 68 yuan, covering for the first time.

Domestic consumer electronics carbon fiber structural parts scarce suppliers. Everbright Tongchuang was founded in 2012. at the initial stage, it was mainly engaged in the production of consumer electronic protection products, and accumulated high-quality customer resources, including Lenovo Group Limited, Lixun Precision, Goyle shares, Compal computer, Weitong Asitong, Heshuo Technology and other high-quality customer resources. Under the guidance of the strategy of "deep customer service", the company began to provide functional products to Lenovo Group Limited in 2014, taking into account the background of Lenovo Group Limited's greater demand for domestic carbon fiber backplane products in PC production, established a carbon fiber subsidiary in 2019, successfully launched carbon fiber backplane products in 2020 and passed Lenovo Group Limited certification, breaking the exclusive monopoly of well-known materials companies in Japan. The company's product line capacity continues to improve, and revenue and net profit grow rapidly. From 2018 to 2022, the compound growth rate of revenue and return net profit reached 19.2% and 18.4% respectively. Looking forward to the future, it conforms to the trend of thinning consumer electronics. With the self-built production capacity of carbon fiber products and the development of new products, the company's high revenue and net profit growth is expected to continue.

Nuggets consumer electronics carbon fiber blue sea, the company has a broad space for growth. Carbon fiber has many advantages, such as low density, high strength, high modulus and so on. The composites made of high quality carbon fiber raw materials and good resin matrix have excellent mechanical properties and are the preferred materials for the thinning of consumer electronics. At present, carbon fiber composites have been used in the A side of notebook computers, mainly for the high-end market. Under the background of the gradual decline in the price of carbon fiber raw materials and the fact that manufacturers such as Everbright Tongchuang have gradually broken through the monopoly of well-known materials enterprises in Japan, we believe that the market space for notebook carbon fiber backplane is gradually opening up. Combined with Lenovo Group Limited's carbon fiber backplane permeability, we expect the laptop carbon fiber backplane market to exceed 6 billion yuan in 2025, corresponding to a compound growth rate of 75% from 2022 to 2025. Under the trend of lightweight, folding screen mobile phones and MR head display devices are also expected to accelerate the introduction of carbon fiber materials. The company has mastered the core technology of making carbon fiber structural parts, and notebook products are the first to break foreign monopoly.

At present, the company's carbon fiber products are mainly used in the A side of Lenovo's high-end notebook models. With the development and design of customized notebook computers with customers, it is expected to gradually expand to D and other models. In addition to Lenovo, the company is also actively opening up other consumer electronics customers. In the field of folding screen, the company is actively developing carbon fiber brackets and flexible screen backboards, which are expected to be mass-produced on a large scale in the future.

Integrated services bind core customers, protection, die-cutting business is growing steadily. The overall pattern of consumer electronic protection and die-cutting products tends to be stable. from the perspective of longer-term industry evolution, suppliers in the industry are gradually changing from single manufacturing to integrated service manufacturing, which is expected to bring slow concentration of the pattern. The company serves large customers deeply, continues to improve the ability of its product line, and continues to increase its sales revenue to Lenovo Group Limited. According to the number of protective products sold by the company to Lenovo Group Limited, we estimate that the market share of the company's protective products in Lenovo Group Limited from 2019 to 2021 is 19%, 21% and 24% respectively. Looking to the future, under the background that the consumer electronics industry is expected to usher in a recovery, the development of the company's protective and die-cutting products mainly benefits from: 1) further increasing market share among key customers; 2) continuously expanding new areas of customers; 3) promoting bamboo and marine thermoplastic products to replace traditional cushioning materials such as EPS, EPE and EPP to enhance profitability.

Risk factors: carbon fiber product development is not as expected; market competition is intensified; exchange rate fluctuation risk; the recovery of the consumer electronics industry is not as expected; the risk of relative concentration of customers; new products, new application expansion is not as expected; capacity construction progress is not as expected.

Profit forecast, valuation and rating: Everbright Tongchuang is a scarce supplier of carbon fiber structures for consumer electronics in China. Under the guidance of the strategy of "deep service to customers", the company successfully launched carbon fiber backplane products in 2020 and passed Lenovo Group Limited certification, breaking the exclusive monopoly of well-known materials companies in Japan. Under the trend of lightweight consumer electronics, carbon fiber composites are expected to continue to infiltrate into laptops and accelerate the introduction of folding screen mobile phones and VR/MR head display devices. We are optimistic about the development of the company's carbon fiber business, and it is expected that the rapid volume of new products will lead to the rapid growth of revenue and net profit in the future. The EPS of the company in 2023-2025 is expected to be 2.28pm 3.30max 4.42 yuan respectively.

Taking into account the comparable company valuation level (comparable company Leiyi Zhizheng, Anjie Technology, Guangwei compound material, Zhongfu Condor Eagle 2023 Wind consensus expected average PE of about 25x), compared with comparable companies, the company Nuggets consumer electronics carbon fiber blue ocean, broader growth space, better competition pattern, we think it is worth a certain valuation premium. According to the PEG valuation method, comparable companies lead wisdom, Guangwei compound wood, Zhongfu Shenying 2023-2025 Wind unanimously expected to return to the mother of the net profit compound growth rate of 24%, 20%, 34% respectively, corresponding to the 2023 PEG of 0.94,1.09,0.98, the average PEG is 1.00. We expect the compound growth rate of return net profit of Everbright Tongchuang from 2023 to 2025 to be 38%, conservatively 0.8 times PEG, corresponding to 30 times PE.

Considering the PE and PEG valuation methods, we give the company 30 times PE in 2023, corresponding to the target price of 68 yuan, covering for the first time and giving a "buy" rating.