Mecca Xincai: Seize the opportunity and take advantage of the momentum as a leader in the industrial anticorrosive coatings segment. The company is a leading container and wind turbine blade coating company. The container paint market accounted for 13.04% in '20 and the wind power blade coating market accounted for 33% in '21. Seize the opportunities of the rise of the local industry and achieve the leading position of anticorrosive coatings in the Mecca industry: 1) blade coatings are stable and stable, and sit at the top of the industry along with the rise of domestic OEMs and blade manufacturers; 2) Container coatings forwardly reserve environmentally friendly water-based technology and production capacity, in line with the rise of China's container manufacturing industry and the “oil to water” industry trend, and overtake cars later.
The company's revenue and profit scale continued to rise as a result of the rapid loading of landwind in '20 and the explosion of container demand in '21.
High quality industrial anti-corrosion track, environmental protection brings new opportunities for development. Industrial heavy anticorrosive coatings are the jewel in the crown of industrial coatings:
1) The service environment is harsh, the durability and reliability requirements are high, and it has high technology and entry barriers; 2) It is widely used in the fields of ships, containers, bridges, electricity, petrochemicals, railways, and construction steel structures, and is a large market of over 100 billion dollars in China.
High-end industrial heavy anticorrosive coatings markets such as marine coatings and marine engineering coatings are monopolized by foreign investors and joint ventures, and local enterprises gradually occupy a certain market share in inland supporting anticorrosive systems such as steel structures, railway engineering, and petrochemicals. Industrial heavy anticorrosive coatings are developing in the direction of water-based and high solid content. Environmental protection trends have brought new development opportunities to local enterprises. Local companies are expected to replicate the “oil to water” curve overtaking path of container paint with early R&D and forward-looking reserves.
Industrial heavy anticorrosive container coatings: Demand is expected to recover in 24 years, and Mecca Core will benefit. Mecca Xincai seizes the “oil to water” opportunity, overtakes cars in curves, and establishes a leading position in the industry. Drewry expects global annual new container production to be -52%/+132%/+7% in 23-25, respectively. The high increase in new container production in '24 will directly drive demand for container coatings. As one of the four major suppliers of container coatings in China, Mecca's flexible performance can be expected.
Industrial heavy anticorrosive marine paint: a good track with high barriers and lots of space, and Mecca's collaborative breakthrough advantage. Marine coatings are a major market for industrial heavy anticorrosive coatings. A good track: 1) high technical requirements, long certification cycle, and high barriers to entry; 2) the global marine paint market was US$5,031 billion in '21, with large market space; 3) CR5, the top ten global marine coatings brand in '22 were all foreign-funded enterprises, with high concentration, and plenty of room for breakthroughs in domestic substitution. Environmental protection policies have accelerated the green transformation of marine coatings, and increased demand for water-based and low-solvent marine coatings. New industry trends have created new opportunities for local companies to rise. Among container shipping shipowners, Mecca Xincai has deep customer resources and strong technical development capabilities. The ocean liner paint series development project is currently underway, and it is hoped to be the first to achieve a breakthrough.
Industrial heavy anticorrosive new energy coatings: Scenery stores three-dimensional power, and has broad room for growth. 1) Wind power coatings: Wind power installations are improving for a long time, wind power coating space is vast, and the company's leading position in blade coatings is stable; overseas+ product upgrade (3650PF) +SKU expansion (tower paint) opens up room for growth; 2) Photovoltaic coatings: composite frames are expected to replace aluminum alloy frames, superimposed new PV installations continue to increase, and new markets open up new space for growth in Mecca. The company has reached cooperation with Covestro; 3) Energy storage coatings: rapid growth in electrochemical energy storage capacity, outdoor storage cabinet coatings and other energy storage equipment Demand is growing.
Heavy anticorrosive industrial infrastructure: The bridge steel structure market is growing steadily, and Mecca is actively expanding. High investment in domestic infrastructure drives the development of bridge construction. The penetration rate of steel structure bridges continues to increase, driving anticorrosive coatings for steel structure bridges to maintain a good growth trend. The company has strong technical advantages in anticorrosive coatings and is actively expanding the infrastructure market, which is expected to create new business growth points.
Profit forecasting, valuation and investment ratings. We expect the company's revenue for 23-25 to be 968, 16.24, and 1,905 million, respectively, -30%, +68%, and +17%, respectively. Net profit to mother will be 2.01, 2.83, and 333 million, respectively, -23%, +41%, and +18%, respectively. The PE corresponding to the current stock price is 23, 16, and 14 times, respectively. The company's current valuation level is higher than that of Sankeshu, the leading architectural coatings segment, but lower than Matsui Co., Ltd., which is also a leader in the industrial coatings segment. Considering that the company has a stable position in the wind power and container coatings market and is actively expanding in the direction of higher barriers in marine coatings, as well as photovoltaic frame coatings and energy storage coatings with more space, it has been covered for the first time, giving it a “buy” rating.
Risk warning. Downstream customer certification risk; technology update risk; risk of large fluctuations in raw material prices; risk of excessive customer concentration; risk of falling short of expectations in demand for terminal products; risk of lagging reference information; policy risk.