Key points of investment

1. Since its establishment, the company has been focusing on the design, R&D, production and sales of polymer modified protective materials. It has been certified as a national high-tech enterprise, and has been rated as the first batch of specialized and new “little giant” enterprises by the Ministry of Industry and Information Technology, and has a CNAS accredited testing center. The company's main business is the design, R&D, production and sale of polymer modified protective materials. The main products include functional protective sleeves and functional monofilaments, which are widely used in various fields such as automobiles, construction machinery, rail transit, communication electronics, etc.

2. The company's competitiveness is reflected in technology and R&D advantages, vertical integrated production advantages, professional service advantages and customer resource advantages. The company's functional monofilament formula design and modified production capacity are also one of the main competitive advantages that distinguish other domestic manufacturers in the functional protective casing market. The development and application of modified formulations is one of the company's key core technologies.

3. The funds raised were invested in the “East China Headquarters Project for the Production of Functional Protective Materials”, “R&D Center and Information Technology Construction” and supplementary working capital. The fund-raising project is arranged around the company's main business to meet the market demand for functional protective tubes, resolve the conflict between strong market demand and the company's insufficient production capacity, improve information sharing among various departments of the company, enhance the company's level of informatization and management, and help achieve the company's future business strategy.

4. Based on forecasts of the company's various businesses and other key assumptions, the company's financial performance for 2023-2025 is as follows: the company's revenue for 2023, 2024, and 2025 is expected to be 6.56, 7.52, and 861 million yuan, respectively, with corresponding growth rates of 25.68%, 14.55%, and 14.60%, respectively, and net profit attributable to mother of 1.32, 1.48, and 170 million yuan, respectively, with corresponding growth rates of 15.73%, 11.75%, and 15.34% respectively.

5. Combining the two valuation methods, we believe that the company's overall fair market value range for 6-12 months is 19.99-227 billion yuan, corresponding to 18.14-20.21 times the company's net profit deducted in 2022; the corresponding company's net profit to mother in 2022 is 17.50-19.50 times, corresponding to the company's 2023 forecast net profit 15.12-16.85 times. Assuming that no over-allotment option is used, the corresponding price per share is 49.97-55.68 yuan based on the total share capital of 40.000 shares after issuance.

6. Risk warning: (1) Risk of failure to establish profit forecasting assumptions; (2) Technical risks: including risk of technology upgrade and iteration, risk of loss of core technical personnel, risk of technological innovation risk and risk of core technology leakage; (3) Business risks: including risk of deterioration in downstream customer business conditions, risk of fluctuating raw material prices and gross margin, risk of new customer development risk and rental property defect risk; (4) Management and internal control risk: risk of management risk due to rapid expansion of scale, risk of improper control by actual controllers, etc.; (5) Financial risk: risk of falling inventory prices Risk of bad debt losses on accounts receivable, risk of falling gross margin, changes in preferential tax policies, risk of gambling agreements, risk of exchange rate fluctuations, etc.; (6) legal risks: risk of patent being declared invalid, etc.; (7) risk of fund-raising investment projects; (8) risks related to the industry where the main products are located, risks related to cyclical macroeconomic fluctuations, and policy risks, etc.

Investors should make their own investment decisions and bear their own investment risks.