Key points of investment
This Friday (February 2), a GEM listed company, “Kent Shares”, asked for a quote.
Kent Co., Ltd. (301591): The company is mainly engaged in R&D, production and sales of high-performance engineering plastic products and components. In 2020-2022, the company achieved revenue of 245 million yuan/317 million yuan/372 million yuan respectively; YOY was -0.13%/29.21%/17.54%, and the three-year compound annual growth rate of operating income was 14.90%; net profit to mother was 43 million yuan/53 million yuan/73 million yuan, YOY was -6.34%/25.11%/37.47%, and the three-year compound annual growth rate of net profit to mother was 17.22%. In the latest reporting period, from January to September 2023, the company achieved operating income of 296 million yuan, a year-on-year change of 4.49%; net profit to mother was 59 million yuan, a year-on-year change of 4.01%. According to preliminary forecasts by the company's management, the company is expected to achieve a net profit range of about 81 million yuan to 91 million yuan for the full year of 2023, a change of 10.49% to 24.14% over the same period last year.
Investment highlights: 1. High-performance engineering plastic products are widely used downstream; the company now has a rich product line and a rich accumulation of high-quality customers. High-performance engineering plastic products are widely used downstream. The terminals cover many fields such as general machinery such as valves and compressors, communication equipment, high-speed rail and rail transit equipment, automobiles, medical equipment, semiconductor equipment, wind power equipment, etc. The company is one of the earliest companies to enter the high-performance engineering plastics industry in China. It has independently developed more than 100 kinds of material formulations such as PTFE wear-resistant and pressure-resistant, and PEEK wear reduction. Currently, it has 6 major product categories, including seals and components, and about 30,000 products of different specifications, with a wide product coverage. The company began supplying insulation products to CommScope, the world's leading network solution provider, in 2001, began supplying compressor seal products for Emerson, began supplying sealing-related products for automotive spare parts for BYD in 2007, began supplying functional structural components for railway locomotives in 2009, and began supplying valve seals for 90 degree rotary valves and fluid control systems in 2011. The company has established long-term cooperative relationships with many world-renowned companies. 2. The company actively develops new PTFE membrane products based on process collaboration, contributing new revenue growth points. Communications is the largest downstream application area for PTFE membrane products. The maturity and popularity of 5G technology in China is driving the growing demand for high-frequency circuit boards, bringing good development opportunities for fluoroplastic products. The rough pressing and sintering process of PTFE membrane products is similar to the production process of the company's dominant product seals. The company has about 20 years of experience in the fluoroplastics industry, entered the PTFE membrane market at the end of 2019, acquired Tiansu Binhai, the earliest domestic company involved in the PTFE film field, and developed PTFE membrane products with excellent characteristics such as high and low temperature resistance, corrosion resistance, low friction, low dielectric loss, and high pressure breakdown resistance. It is now used as consumables in the production process of communication wires, cables and LCD screens, contributing new revenue growth points. According to the prospectus, the company plans to increase production capacity through a PTFE film production expansion project and strengthen its layout in the PTFE film field with the advantages of customer resources it has now accumulated in the communications industry.
Comparison of listed companies in the same industry: Taking into account aspects such as business and product types, Pan-Asia Micro Holdings, Weiwan Seal, Rambo Technology, Walter Co., Huari New Materials, and Shengbang Co., Ltd. were selected as comparable listed companies in Kent; however, considering the differences in the business structure of the company and comparable companies, we tend to think that the reference significance is limited. Looking at the comparable companies mentioned above, the average revenue scale in 2022 was 499 million yuan, and the gross sales margin was 30.71%; the comparable PE-TTM (arithmetic average/ outlier excluded) was 30.76X; in comparison, the company's revenue scale was lower than the average of comparable companies in the industry, and the gross margin was slightly higher than the average of comparable companies in the industry.
Risk warning: Companies that have begun the inquiry process may still not be able to go public due to special reasons; the company content is mainly based on prospectus and other public information; there is a risk that the selection of listed companies in the same industry is not accurate; there may be interpretation biases in the selection of content data.