Pioneering China's PEEK industry and laying out back-end high-value-added production capacity. Since its establishment, the company has focused on independent R&D and innovation of PEEK materials. It has now broken the monopoly situation of international giants in the PEEK industry and pioneered the industrialization of PEEK series products in China. Currently, the company has a front-end production capacity of 1,000 tons/year of pure resin powder; the back-end production capacity of pure resin fine powder is 300 tons/year, pure resin granule production capacity is 700 tons/year, and composite reinforced granule production capacity is 350 tons/year. The company's performance is growing rapidly, driven by demand, and the overall gross margin level is high. In the future, the company will focus on high-value-added back-end and product-side production capacity, and the profit level is expected to reach a new level.
The PEEK industry is highly concentrated in supply, and demand has great potential for growth. Due to PEEK's extremely high industry barriers, the global PEEK market has maintained a “one super strong” monopoly competition pattern for a long time. In recent years, domestic companies have gradually broken the monopoly of foreign companies in the PEEK field and are scrambling to lay out PEEK production capacity. PEEK has a wide range of downstream applications. The automotive industry benefits from the rapid development of new energy vehicles, and PEEK has become the best choice for many important components in automobiles; in the semiconductor field, as one of the few materials that can meet the needs of advanced semiconductor processes, the replacement of PEEK helps improve industry production efficiency; in the medical field, PEEK materials are popular due to their good X-ray penetrability and excellent biocompatibility, and the introduction of the company's localized PEEK into the medical field is beginning to bear fruit.
The company's products have both performance and cost performance, and continue to achieve import substitution. The company has in-house production capacity for the entire PEEK process, and has mastered 5000L reactor production technology to ensure that PEEK products have the advantages of high purity, thermal stability, good batch stability, color consistency, etc., and the product performance is in line with international standards. Furthermore, the company's lower material procurement costs, labor and manufacturing costs make the company's products more cost-effective than international giants while maintaining the same gross margin as international giants, so localization substitution is full of core competitiveness and motivation.
First coverage, giving a “buy” rating. We expect the company to achieve revenue of 2.54/3.00/409 million yuan in 2023-2025, yoy +2.43%/+18.10%/+36.41%, net profit to mother of 0.48/0.80/120 million yuan, yoy -13.96%/+66.46%/+50.14%, corresponding PE 69/41/28 times, respectively. While the comprehensive company is deeply involved in PEEK, it continues to explore the characteristics of new products with high added value and high barriers, as well as its life cycle. We recommend giving the company a price-earnings ratio of 50 times in 2024, corresponding to the first target price of 33 yuan, and give it a “buy” rating.
Risk warning: Capacity utilization rate and construction progress fall short of expectations; risk of fluctuations in raw material prices.