The company is an advantageous enterprise in the field of industrial coatings and is a leader in domestic container and wind power blade coatings.
Currently, the company's products are mainly wind power blade coatings, container coatings, bridge and steel structure industrial coatings. Among them, the company is the single champion of wind power blade coatings, with a market share of about 30% in 2021; it is also one of the top four container paint suppliers in China, with a market share of about 20% in 2022. The company adheres to the “1+3+N” development strategy and actively lays out multiple application fields. The company currently has a production capacity of 20,000 tons/year for water-based paint in Shanghai, 40,000 tons/year for water-based paint, 10,000 tons/year for oil-based paint and 10,000 tons/year for oil-based paint, and is building a production capacity of 70,000 tons/year in Zhuhai, of which the production capacity of water-based paint is 40,000 tons/year. Water-based paint is already the company's main product, benefiting deeply from the “oil to water” trend in the industry. 2023H1 wind power coatings, container coatings and other industrial coatings business accounted for 52.4%, 43.4%, and 4.2% of revenue, respectively.
In the field of wind power and container coatings, which are the main revenue components, the rapid growth of wind power installations and the recovery of container production may drive up demand for corresponding coatings. According to the prospectus, the global paint market exceeds 160 billion US dollars, of which the Asian market accounts for about half. The company may benefit from the continuous increase in the total installed capacity of wind power and the recovery of container production in response to the increasing demand for wind power paint and container paint. We estimate that by 2025, the global demand for new wind power coatings will be about 67,000 tons, and China's demand for new wind power coatings will be about 45,300 tons, corresponding to a market size of about 3.4 billion yuan and 2.3 billion yuan respectively. The container paint market demand is expected to return to 245,000 tons, corresponding to a market size of nearly 4.4 billion yuan. We believe that with the recovery of container production and environmental trends in the industry, the market share of the company's container coating business may further increase.
With a multi-field layout, the core technology forms a moat, and marine coatings may become a new growth point for the company. The company began research on blade leading edge protection technology earlier. Currently, it is a leading wind power blade coating company, and has won the single title of wind power protective coatings and wind power blade coatings in the 2022 China Coatings Industry Single Champion Company List. In the future, it may use customer synergy to expand the wind power tower coating business; the company is also one of the top four container paint suppliers in China. It has a keen sense of smell and developed environmentally friendly coatings earlier, and has a high market share with its first-mover advantage. In addition, the company leverages the collaborative advantages of container customers to lay out the marine paint market. The marine paint market is broad. It is expected that the compound annual growth rate of the global marine paint market will reach 5.6% in the future, and its market size will also be far larger than the container paint market.
High environmental requirements and domestic substitution are future trends. Domestic and foreign paint industry policies all place more and more stringent requirements on the environmental performance of coatings. We believe that environmental protection will become the main theme of paint development; the coating industry is facing a trend of increasing functionality and individualized requirements. With the expansion of fans and the development of offshore wind power, wind power blade coatings have higher protection requirements, and environmental protection trends also place higher demands on container coatings; in addition, the trend of localization substitution in the paint market is becoming more and more obvious.
Profit forecasting and investment ratings: We selected paint companies such as Matsui Co., Ltd., Sankeshu, and Astron Energy as comparable companies. The average PE of comparable companies in 2023 was 28.9 times. We expect the company's net profit to be 1.9, 3.0, and 380 million yuan in 2023-2025, up -27.6%, 61.4%, 23.5% year-on-year, and 23.9/14.8/12.0 times in 23-25. Considering the strong competitive advantages of the company's container coatings and wind power blade coatings business, there is room for growth in other business areas in the future, and coverage for the first time, giving a “gain” rating.
Risk factors: Production capacity release and new product development fall short of expectations, downstream demand falls short of expectations, and risk of cost fluctuations.