The company is mainly engaged in high-performance, safe and environmentally friendly polymer material additives. Its main products cover nucleating agents, synthetic hydrotalc, NDO compound additives and antioxidants. With solid R&D and market expansion capabilities, the company has become a supplier to large domestic and foreign energy and chemical companies. Customers include Sinopec, CNPC, CNOOC, Yanchang Petroleum, Wanhua Chemical, Hengli Petrochemical, Adico and Baerloch.

The plastics market is huge, and the plastic modification rate continues to rise. In 2022, China's plastic production reached about 777.16 million tons, and the modification rate reached 23.5%. Compared with the 50% modification rate in developed countries, there is still huge room for improvement. Home appliances and automobiles are the areas where modified plastics are used the most. As demand for modified plastics in China's home appliances (high-end, intelligent and personalized) and automobiles (lightweight and lithium batteries used in new energy vehicles) continues to increase, the modified plastics market in China will continue to grow in the future.

The market for key modified additives is still dominated by foreign investment, and the rise of domestic manufacturers is speeding up the process of domestic substitution.

In 2022, China's nucleating agent and synthetic hydrotalcite import substitution rate was less than 30%. The market share of nucleating agents was mainly occupied by Milliken, Adico, and New Japan Chemical, etc., while the middle and high-end hydrotalcite market share was mainly occupied by Kyowa Chemical and its domestic subsidiaries, so there is still huge room for import substitution. In recent years, additive companies represented by the company in the field of nucleating agents and high-end hydrotalcite have created cost-effective, high-performance, and high-customer stickiness products through years of R&D and market expansion. It is expected that the domestic substitution process will further accelerate in the future.

The core competitiveness of the company's business is highlighted, and in the context of autonomy and control, the trend of import substitution is expected to continue. Nucleating agents: 1) The technical parameters of the main nucleating agent products are competitive, and some indicators surpass international suppliers; 2) the production process is advanced (not only improving traditional processes, but also independently innovating. For example, the company has the world's first tetrahydrophthalic anhydride beta crystal toughening nucleating agent production process) and has obtained certification from relevant international associations; 3) The company strengthens its stickiness with customers through technical exchanges and customized products on the basis of going deep into large-scale energy and chemical supply chains at home and abroad. In addition, in recent years, the company has begun to serve customers in terms of applications. Starting from the project establishment stage, it cooperates with customers in R&D and testing, and provides customers with consulting solutions to enter the market segment. Synthetic hydrotalcite: 1) With its excellent products, some parameters are competitive, compared to international giants. For example, the acid absorption capacity of the company's hydrotalcite products is 4-6 times that of traditional products, and has been replaced by Kyowa Chemical's hydrotalcite imports; 2) The production process is also advanced. The company has mastered the unique surface treatment process of synthetic hydrotalcite, making the product a breakthrough in performance; 3) With its excellent products, the company's synthetic hydrotalcite products are certified by major customers: The company's synthetic hydrotalcite products are imported by Sinopec and designated for synthetic hydrotalcite to be used in countries other than synthetic hydrotalcite talc .

Strategic acquisitions helped the company's industrial chain expand horizontally in the field of antioxidants, give full play to its synergetic advantages, and add new impetus to the company's growth. The company lays out the antioxidant sector through the acquisition of Keao Chemical and Cindafone, and will adopt industrial chain extension and product line collaboration strategies.

Profit forecasting and valuation: The company is a leader in the domestic plastic additives segment. It has high-performance nucleating agents, hydrotalcite and compound formulation products comparable to those of international suppliers in terms of performance, and the products and process routes have all been certified and patented. The domestic plastic modification rate is expected to continue to increase, and the additives market will continue to expand. The company penetrates deep into the supply chain of large domestic and foreign energy companies through excellent products, and enhances its stickiness with customers by providing consulting solutions to enter market segments, and scale performance will continue to grow. For the first time covered, the company is expected to achieve operating income of 864 million yuan, 1,038 million yuan, and 1,285 million yuan in 2023-2025, and net profit of 224 million yuan, 292 million yuan, and 390 million yuan, respectively. PE is 23, 18, and 13 times, respectively, giving the company a “highly recommended” rating.

Risk warning: risk of patent disputes, risk of disclosure of core technology secrets, risk of business development being greatly affected by downstream customers, risk of rising raw material prices or failure to supply in a timely manner