The issuer's main business is R&D, production and sales of fine chemical products. The business scope covers hair dyeing, plant protection and special engineering material monomers. The products are widely used in international first-line beauty brands such as L'Oréal, Henkel, and Wella, and is the largest supplier of raw materials for hair dyes.

Single application scenarios for special engineering materials extend to aerospace, military, consumer electronics, electrical engineering and other fields.

Leading producer of hair dye ingredients, covering international first-tier beauty brands such as L'Oréal, Henkel and Wella: The issuer has become the main supplier of international first-tier beauty brands such as L'Oréal, Henkel, and Wella with excellent products. It is a leader in the industry, and has obvious customer advantages. Benefiting from the continuous growth of downstream demand, the company's business scale is expected to expand rapidly in the future, and has successfully used customer advantages to enter other cosmetic ingredients (makeup, personal care, fragrance), bringing new growth points to the company.

A breakthrough in the PBO fiber monomer “stuck neck technology”: Issuers and downstream companies have broken through US and Japanese technology blockades and become one of the few countries in the world that can independently produce PBO fiber. The fiber has now been used in various fields such as military industry, aviation, outdoor sports, heat resistance, etc., and is growing rapidly. As one of the leading domestic companies that can supply PBO units on a stable scale, the issuer is expected to quickly boost revenue as downstream applications break down, and the market space is broad. At the same time, the issuer's heterocyclic aramid monomer is progressing rapidly, and will gradually pass downstream certification and enter the release stage later. The overall issuer is an industry leader in specialty fiber monomers, and the customer advantage is obvious.

Manufacturer of special PI monomers: Using high-purity aminophen monomer preparation technology accumulated over many years as hair dye ingredients, the issuer successfully entered the production of customized PI monomers and customized thermoplastic polyimide AURUM monomers for Mitsui Chemicals, which are mainly used in fields such as new energy vehicles, consumer electronics, mechanical and electrical engineering, etc., and the downstream market space is broad, and may usher in explosive growth. The issuer's PI unit uses the advantages of technology and customer resources to avoid low-end homogenized PI unit competition. It is a leader in the field of segmentation. Multiple units are one-on-one, and are typical enterprises with high-quality development driven by innovation. As the country promotes high-quality chemical development, issuers will gain more room for development.

The company has entered a period of rapid growth in performance and excellent financial performance: in 2022, the company achieved net profit of 150 million yuan, and a compound annual growth rate of more than 20% over the past three years in 2020, 2021 and 2022. In 2023, the company's revenue is expected to be 799 million yuan, and net profit to mother is 171 million yuan. Net profit growth rates from 2023 to 2025 are expected to be +13%, +17%, and +45%, respectively. We expect that with the gradual commissioning of Inner Mongolia's Dingli and fund-raising projects in the later stages, the company's performance may increase further.

Profit forecasting and valuation suggestions:

We expect the company's revenue for 2023-2025 to be 799, 11.56 billion yuan, and 1,572 million yuan, respectively, and the estimated net profit to mother will be 171, 200 million yuan, and 290 million yuan, respectively. We used two valuation methods: absolute valuation method and relative valuation method. After applying the two valuation methods, the issuer's forward reference market value range was 35.06-3.685 billion yuan, the price-earnings ratio of the corresponding issuer's TTM net profit in 2023 was 19.32-20.31 times, the price-earnings ratio of the corresponding issuer's projected net profit to the mother in 2023 was 20.50-21.55 times, and the price-earnings ratio corresponding to the issuer's net profit deducted in 2022 was 23.36-24.56 times. As of December 5, 2023, the average static price-earnings ratio of the C26 chemical raw materials and chemical products manufacturing industry in the last month of the China Securities Index was 14.86 times. According to the prospectus, the maximum total share capital of the company after issuance is 235.52 million shares. Assuming no over-allotment option, the company's forward reference price range per share is 14.89-15.65 yuan/share.

Risk warning:

Risks affecting profit forecasting and valuation if profit forecasting assumptions are not established; risk of secondary market fluctuations and risk of falling valuations of comparable companies; risk of declining business performance; risk of legal compliance risk of production and operation; risk of fluctuating procurement prices; risk of high export sales; risk of high customer concentration; risk of production safety risk; environmental risk; risk of product price fluctuation; risk of product quality control; risk of rapid expansion of assets and business scale; risk of gross margin fluctuations; risk of exchange rate fluctuations; accounts receivable recovery Risks; risk of falling inventory prices; risk of new product and technology development; risk of loss of core technical personnel; risk of capital investment project implementation; risk of human resources risk; risk of macroeconomic and policy fluctuations; risk of changes in export tax rebate policies; risk of changes in tax incentives for high-tech enterprises; risk of declining return on net assets; risk of failure of issuance, etc.

Investors should make their own investment decisions and bear their own investment risks.