Key points of investment:
The first coverage gave a “gain” rating: the company is a domestic leader in aramid and spandex, and is currently growing from a traditional main business to a new materials platform company. We expect the company's EPS for 2023-2025 to be 0.43/0.61/0.74 yuan. Referring to the company's comprehensive PS and PB valuations, the target price is 20.16 yuan, which corresponds to the current share price space of more than 70%, and for the first time, it covers a “gain” rating.
The company is becoming a material platform company, aramid coating from 0 to 1: We believe that new businesses such as aramid coating and green printing and dyeing are expected to drive the company from a leader in the industry segment to a platform company, leading to an increase in valuation. Among them, aramid coating is one of the best performing lithium battery coating materials and is expected to replace traditional ceramic or organic coating. In the future, as battery safety and performance are improved, the penetration rate is expected to increase dramatically, bringing a lot of room for improvement as costs drop further, and the growth rate is expected to exceed expectations. The company's active layout in this field is expected to fully benefit from future upward space.
Multiple factors promoted the high growth of aramid, and the company consolidated its leading position: due to the intensification of geographical disputes, demand for aramid increased demand for new applications increased. According to Teijin's forecast, the global aramid market space is expected to reach 5.3 billion US dollars by 2025, with a CAGR of 9.7%. As a leader in aramid, the company has a production capacity of 10,000 tons of para-aramid and 16,000 tons of meta-aramid, ranking fourth in the world and second in the world respectively. As the domestic aramid import substitution ratio increases, the company will fully benefit from future breakthroughs in new application fields such as upstream and downstream aramid coating.
Spandex has a good cost advantage, waiting for the industry to recover: As one of the leading spandex companies in China, the company has a total production capacity of about 95,000 tons in Yantai and Ningdong. Among them, the Ningdong base has a strong cost advantage. It is expected that the future will rebound from the bottom as the proportion of spandex added to textiles and clothing increases.
Risk warning: New business development falls short of expectations, and the competitive pattern of aramid deteriorates.