Focusing on the filler segment circuit for 38 years, performance has grown rapidly. The company's predecessor, Donghai Silicon Powder Factory, was established in 1984, focusing on R&D, production and sales of silicon powder for nearly 38 years. The silicon powder fillers produced by the company are widely used: epoxy encapsulation materials (EMC) and underfill materials (Underfil l) for chip packaging, copper clad plates (CCL), thermal interface materials (TIM), electronic encapsulants, and other semiconductors, and new energy vehicles. They can also be used in environmentally friendly and energy-saving construction adhesives, honeycomb ceramic carriers, and emerging fields such as UHV electrical insulation products, 3D printing materials, and dental materials.
Domestic substitutation+high downstream boom, and the market space for spherical silicon powder is huge under the support of dual logic
The company's silicon powder products can be mainly divided into two categories: square silicon powder and spherical silicon powder. Among them, spherical silicon powder has better thermal conductivity and electromagnetic properties, and ASP far exceeds that of square silicon powder.
Currently, domestic spherical silicon powder still relies on foreign imports, and there is a huge gap between supply and demand. According to data released by the China Powder Technology Network, the three companies Denka Co., Ltd., Japan's Longson Company, and Japan's Nippon Steel Corporation together occupy 70% of the global market share of spherical silicon powder. Only domestic companies and Huafei Electronics can mass-produce spherical silicon powder, and their price has a certain advantage over overseas competition. At the same time, as the generation of server chips is upgraded, the materials supporting CCL will also be upgraded. The spherical silicon powder filler produced by the company has lower transmission loss and heat dissipation performance than traditional square silicon powder, and future demand may increase further.
Revenue reached a record high in 2023, and the high-end layout can be expected to grow. On March 25, 2024, the company released its annual report. In 2023, we achieved revenue of 712 million yuan, a record high. The main reason is that the downstream boom is gradually picking up. At the same time, the company is actively promoting the transformation and upgrading of the product structure. The revenue share and gross margin of high-end products such as spherical silicon powder and spherical alumina powder have steadily increased, which has become a strong driving force for the company's performance growth. As the company continues to cultivate in the field of silicon powder and continuously break the foreign monopoly of high-end products, future performance may continue to show a rapid growth trend.
Investment advice
Based on the company's 23 annual report, we adjusted the profit forecast. The 2024-2025 revenue forecast was adjusted from 9.43 and 1,121 billion yuan to 9.13 billion yuan, adding the 2026 revenue forecast of 1,260 million yuan; the 2024-2025 EPS forecast was adjusted from 1.44 and 1.75 yuan to 1.35 and 1.64 yuan, adding the 2026 EPS forecast of 1.91 yuan, corresponding to the closing price of 43.43 yuan on March 25, with a price-earnings ratio of 32.18, 26.48 yuan, 22.69 times, based on the scarcity of spherical silicon powder, the rating was raised from “increase” to a “buy” rating.
Risk warning
Product development falls short of expectations, downstream demand falls short of expectations, and there is a risk that the competitive landscape will deteriorate.