Main points of investment:

Debang Technology is mainly engaged in high-end electronic packaging materials, providing packaging, bonding, heat dissipation, assembly and manufacturing and other functional materials and services, mainly electronic packaging materials, thermal conductive materials, conductive materials, wafer slicing films, reduced films and other more than 400 kinds of products. In 2022, integrated circuits, smart terminals (mainly consumer electronics), new energy and high-end equipment accounted for 10.2%, 19.7%, 64.0% and 6.1%, respectively.

Participate in a number of national and provincial major electronic packaging materials research projects, UV film, solid crystal materials to fill the domestic gap. Debang Science and Technology is a national high-tech enterprise, the first batch of gazelle demonstration enterprises in Shandong Province, the national special new "Little Giant" enterprise (2021), the largest shareholder 18.65% of the shares held by the National Fund. Debang Science and Technology has 2 state-level overseas high-level experts and 119 R & D personnel in 2022, an increase of 46.91% over the same period last year.

With breakthroughs in the research and development of integrated circuit packaging materials, new products in the field of advanced packaging are expected to break out. Debang Technology IC packaging materials products cover wafer processing, chip-level packaging, power device packaging, board-level packaging, module and system integration packaging and other process links. The future growth momentum of the integrated circuit closed test industry mainly comes from advanced packaging, which is expected to account for nearly 50% of the global advanced packaging market in 2025. The new products in the advanced packaging field of the company include DAF film, AD adhesive, chip-level bottom filling adhesive and thermal conductive interface material TIM1, which is expected to increase volume quickly. IPO fundraising investment annual production of 15 tons of chips and system packaging materials and DAF film gradually put into production.

New energy materials to serve Ningde era, Tongwei and other customers, expand automation production capacity to strengthen the leading position. The downstream application of the company's new energy Applied Materials Inc is mainly the bonding and packaging of power cells and photovoltaic stacked crystals, and the main customers include Ningde Times, Tongwei shares, Ates and other enterprises, of which Ningde Times became the company's largest customer in 2021, accounting for more than 20% of revenue. From January to July 2023, the installed capacity of power cells and photovoltaic in China still maintained rapid growth compared with the same period last year. Debang Science and Technology announcement plans to lay out 30,000 tons of power battery material capacity, of which Kunshan plant expansion project is expected to be put into production soon, is expected to fully enjoy the development dividend of the industry.

Smart terminal packaging materials serve international customer wearable products, which are expected to benefit from the expansion of consumer electronics applications. The company's smart terminal packaging materials are widely used in smart phones, tablet computers, smart wearable devices and other mobile smart terminals, joining Apple Inc, XIAOMI and other industrial chains, in which TWS headphones are one of the core application terminals.

Investment analysis opinion: for the first time, the company is given a "buy" rating. It is estimated that the company's revenue in 2023 to 2025 will be 11.7 yuan, 15.7 yuan and 1.97 billion yuan respectively, with corresponding growth rates of 25.8%, 34.8% and 24.9%, respectively, and its net profit will be 1.76,2.51 and 339 million yuan respectively, corresponding to year-on-year growth rates of 43.0%, 42.9% and 34.8% respectively, and the corresponding dynamic PE for 2023 to 2025 will be 51,36 and 27 times respectively. Using the dynamic PE relative valuation method, the company was given a dynamic PE of 64.8x in 2023, which was 26.9% higher than the closing price on September 6, 2023, and was given a "buy" rating for the first time.

Risk hint: the verification of advanced packaging materials for integrated circuits is less than the expected risk; the scale expansion of the domestic new energy market is not as good as the expected risk.