The allocation of two major sectors, new materials, pharmaceuticals, and pesticide chemicals establishes a stable revenue stream in diversified downstream application fields. Kangpeng Technology is a high-tech enterprise engaged in R&D, production and sales of fluorine-containing fine chemicals. The company excels in R&D and manufacturing of fluorine-containing specialty chemicals. The company's products mainly cover the two major sectors of new materials, pharmaceuticals, and pesticide chemicals. Terminal applications include LCD screens, lithium-ion batteries, printed circuit board manufacturing, medical care, and plant protection. The company's revenue scale continues to expand, and the net profit level is rising steadily. The company's revenue for 2020-2022 was $629, 10.05, and $1,238 million, respectively, and net profit attributable to mother was $0.90, 1.34, and 181 million yuan.
Based on the two core technologies of fluorination technology and carbon-carbon bond coupling, active investment in research and development has brought about many technological breakthroughs. The company has developed a series of highly competitive core technologies around fluorination technology and carbon-carbon bond coupling technology. Fluorination technology can introduce fluorine atoms and is mainly used in products such as fluorine-containing liquid crystals, fluorine-containing battery materials, and fluorine-containing drugs. Carbon-carbon bond coupling technology is an important method for synthesizing complex molecules from simple molecules. It is mainly used in products such as display materials, pharmaceutical and pesticide chemicals, and silicone materials. The company's many technologies, such as preparation technology for lithium bisfluorosulfonimide salt (LiFSi), preparation technology for monomer liquid crystal compounds containing difluoromethoxyl ether bridges (CF2O), and isomerization control technology, have reached advanced levels.
The field of fine fluorine chemicals continues to expand, achieving a comprehensive layout in multiple fields. In the field of display materials, the company relied on two major technical advantages to continuously improve product performance and achieve in-depth cooperation with mixed crystal giants. Fluorine-containing monocrystals occupied 50% of the global market in 2021. In terms of new energy battery materials, the company laid out a new energy circuit earlier with its technical accumulation in product impurity control. The company's LiFSi preparation technology solves existing technical pain points. The product has high purity and has been supplied to 8 of the top ten domestic electrolyte manufacturers. In the field of silicone materials, the company broke the technological monopoly and promoted the import substitution of silicone pressure-sensitive adhesive products. In the field of pharmaceuticals and pesticide chemicals, the company is deeply tied to downstream customers such as MSD, Eli Lilai, and Coda to achieve stable sales of products.
The fund-raising project is increasing the battery materials sector, and we are optimistic that LiFSi will be replaced in the future. The IPO fund-raising project is the first phase of the 25,500 tons/year battery material project (phase I) of Lanzhou Kangpeng New Energy Technology Co., Ltd., with an estimated total investment of 651 million yuan, mainly including 1 10,000 tons/year lithium bisfluorosulfonimide salt production line and 1 50,000 tons/year vinyl sulfate production line. LiFSi can better meet the development needs of future batteries with high energy density and wide operating temperatures, and is the best choice to replace LiPF6. LifSI is expected to gradually enter the phase of industrial introduction and demand explosion in the next 5 years, and the production capacity gap will continue to expand. The implementation of this project can effectively supplement the company's LiFSi production capacity, improve the company's layout in new energy battery materials, and meet the company's business development needs. This expansion of production scale is expected to reduce product production costs and increase profit levels.
Profit forecast: We expect Kangpeng Technology's revenue for 2023-2025 to be 1,047/13.81/1,803 billion yuan respectively, up -15.46%/31.97%/30.55% year-on-year, and net profit to mother of 135/1.71/225 million respectively, up -25.33%/26.63%/31.67% year-on-year, and corresponding EPS of 0.26/0.33/0.43 yuan respectively. Combined with the company's closing price on January 2, the corresponding PE was 43/34/26 times, respectively. We are optimistic about the continuous increase in the proportion of LiFSi added to the electrolyte and the completion of the company's LiFSi project, which was covered for the first time, giving it a “buy” rating.
Risk warning: risk of customer concentration, risk of product renewal, risk of LiFSi demand falling short of expectations, risk of falling product prices