A platform-based leader for copper-based materials. For the first time, Sirui New Materials is the leading high-performance copper-based new material platform leader in China. The company is committed to the development and manufacture of copper-based chromium-based alloys, and has expanded the technology to its related industries, and has production capacity elasticity, demand generality, and technical resilience. We expect the company to achieve net profit of 1.02/1.52/222 million yuan in 23-25, corresponding to PE 66/44/30X, respectively. In emerging fields, the company's growth logic combines high downstream growth rates (rocket thrust interior wall materials, optical module base materials, etc.), domestic substitution (medical imaging components), and increased penetration rate (copper-iron alloys), and scarcity is prominent. Using the segmented valuation method, we gave a target market value of 7.704 billion yuan, corresponding to a target price of 13.76 yuan. For the first time, coverage was given an “increase in wealth” rating.
Focus on high-end copper alloy materials and continue to expand product pipeline
The company is a leading platform company for high-performance copper-based new materials in China. Its main business includes high-strength high-conductivity copper alloys, medium- and high-voltage electrical contact materials, high-performance metal chromium powder, and medical imaging components. The company's downstream can be divided into traditional tracks (strong stability) and emerging tracks (high growth). In 2019-2022, the company's revenue CAGR was 19.24%, and net profit to mother was 45.88%. The company's revenue consists mainly of high-strength high-conductivity copper alloys and medium- and high-voltage electrical contact materials, accounting for more than 80% in recent years. At the same time, the company actively lays out high-end application fields. Revenue from metal chromium powder and medical imaging components continues to grow. The total revenue share increased from 4.27% in 2018 to 8.82% in 2022.
Downstream applications span multiple sectors, with traditional racetracks as shields, and emerging racetracks for traditional racetracks. 1) Copper-chrome contacts: the core component of power switches. China's copper-chrome contact market is estimated to be 4.626 billion yuan in 21-30, with a CAGR of 11.43% in 22-30; 2) End rings and guide bars:
The rail transit industry is developing steadily, with an estimated market size of 57.113 billion yuan in 21-30 and a CAGR of 10.00% in 22-30. In terms of emerging racetracks, 1) medical components: the increase in the localization rate contains development opportunities. China's market size is expected to be 6.971 billion yuan in 21-30, and the CAGR is 18.16% in 22-30; 2) High-performance chromium powder: benefiting from the expansion of the aviation industry, China's market size is estimated to be 17.322 billion yuan in 21-30, and 20.71% in 22-30; 3) Rocket nozzles: The global rocket nozzle market is expected to be 10.459 billion yuan in 21-30, and CAGR in 22-30 It was 21.79%.
Production capacity expansion+technical advantages. In terms of long-term sustainable production capacity flexibility, the company has a wide range of business applications and a wide variety of products. While steadily advancing the original industry, it is continuously increasing the industrialization capacity of new technologies, multiple “N year doubling” plans, and multiple “0 to 1” new product lineages to create sufficient production capacity flexibility; in terms of technical resilience, as of 2023.6.30, the company has a total of 20 projects under development, involving new products such as high-strength, high-conductivity, heat-resistant copper alloys, 3D printing, and semiconductor equipment cooling boards. Carry out customer sample delivery or small-batch production. The downstream covers various application fields such as aerospace and optical communication.
Risk warning: risk of technology upgrade iteration; risk of technology failure to form a product or achieve industrialization; risk of cost increase.