Leading hair dye ingredients company, customer accumulation & technical advantages consolidate its leading edge: The company started with the hair dye business. After years of technology accumulation and product update and iteration, it has now become a leading domestic and foreign manufacturer of hair dye ingredients. The core customer group covers many famous brands such as L'Oréal, Henkel, and Coti/Wella. At the same time, compared with domestic and foreign manufacturers in the same industry, the company has more types of raw materials and synthesis processes for hair dyes. In the future, with the further improvement of environmental requirements for hair dye production and safety requirements for human use, the company's technical advantages will become more prominent, consolidating its leading position. Furthermore, benefiting from the current “silver hair economy” and the relatively popular experiential economy, demand for hair dyes, including black and color, is expected to improve further in the future, and the profitability of the company's main business will increase.

The downstream application scenarios of PBO are broad, and may bring about continued high incremental demand: China has become the second country after Japan that can industrially produce PBO specialty fibers. Among them, high-purity monomer raw materials are essential for PBO polymerization, but their synthesis is difficult. The company is one of the few enterprises that can produce PBO monomers at home and abroad. Currently, it is synthesized using resorcinol as a raw material, and the new production capacity will be synthesized using trichlorobenzene as the starting raw material, which is expected to improve product profitability and production capacity. As a new generation of high-performance organic fibers with high strength and good comprehensive properties, PBO is widely used in aerospace, defense and military, temperature-resistant materials, cables and ropes, etc., and is expected to usher in rapid growth in many scenarios in the future.

Special PI monomers and plant protection materials have strong differentiated properties, and customization enjoys stable customer advantages:

The company avoids homogenized competition with low-end PI monomers and continues to supply special PI monomers to companies such as Mitsui Chemicals. The PI produced has a low dielectric constant and insulation. The scale of plant protection materials is relatively small, but the company has strong product customization properties and differentiated competitive advantages. The main customer portfolios of chemistry and ARYSTA are world-renowned companies.

Investment advice: The leading position of hair dye ingredients is stable, and special monomers open up room for future growth. The company is expected to achieve revenue of 8.46/1,055/ 1,369 million yuan in 2023-2025, and net profit to mother of 1.97/2.69/ 374 million yuan. The corresponding PE was 29.5/21.6/15.5 times, respectively. It was covered for the first time, and a “gain” rating was given.

Risk warning: risk of fluctuating raw material prices; risk of high customer concentration; risk of environmental protection and legal compliance.