A localization platform for semiconductors and new display “stuck neck” materials. Established in 2000, the company broke through the monopoly of Japanese companies such as Mitsubishi in the early stages, became the leading printing consumables, and established a successful paradigm of designing product matrices and supporting key materials in the traditional main business. Beginning in 2013, the company has successively targeted the two major circuits of semiconductors and new displays, and is committed to localizing “stuck neck” materials monopolized by foreign companies such as Dow and Toray, and has become the leader in domestic CMP polishing pads. Over the years, the company has continued to test and improve materials in interactive R&D with downstream customers, while building a more complete product matrix around the urgent needs of downstream customers, making great strides towards a “one-stop platform” for high-end electronic materials.
Build seven major technology platforms to penetrate the industrial chain. The long-term development of overseas giants such as Toray is mostly inseparable from building an underlying technology platform. Starting with its traditional main business, the company has continuously settled in the fields of organic synthesis and inorganic molding, and has created seven major technology platforms, realized technological empowerment between product lines horizontally, and achieved vertical integration of the industrial chain. For example, the core behind PSPI monomers, photoresist monomers, and INK monomers for panel packaging materials are all organic synthesis; the accumulated sintering experience of inorganic materials in printing agents is also compatible with the preparation of grinding particles in polishing solutions; at the same time, the company has formed several key upstream monomer production capabilities, achieving industrial chain advantages that are difficult for compound manufacturers to reach. Set sail against foreign giants.
New display materials: Follow the boom in OLED and open a new growth curve. In 2017, the company began entering the field of display materials. Following the main context of PI high-performance materials, the company has expanded a series of materials such as YPI, light-sensitive PSPI, black PSPI, oriented PI, and fluorine-free PSPI, and has now become the first domestic YPI mass producer and shipping company. PSPI also has the largest share of some downstream customers; it has also laid out materials such as TFE-INK and Low Dk INK to achieve a one-stop supply capacity. In the four quarters of 2023, the company showed a year-on-year growth rate of 85%/621%/428%/175%, respectively, and a year-on-year increase of 268%. Revenue grew rapidly from less than 50 million to 174 million yuan, which has become a new growth curve for the company to look forward to.
Semiconductor materials: A platform-based layout for manufacturing and packaging is now in place. Beginning in 2013, the company used CMP polishing pads as a starting point to enter semiconductor materials; from 2020 to 2023, the company's polishing pad business revenue contribution grew rapidly from 79 million yuan to over 400 million yuan, and now accounts for about 30% of the domestic market; in 2022, the company began to accelerate the platform-based layout, successively breaking through a series of materials monopolized by foreign companies, such as polishing liquid, cleaning liquid, photoresist, and PSPI for RDL heavy wiring. Among them, revenue from polishing liquid and cleaning liquid increased 320% year-on-year in 2023, and the launch of the photoresist project was announced at the end of the year. The company has gradually formed a semiconductor material platform layout that runs through manufacturing and packaging, which is scarce in China.
Investment advice. We expect the company to achieve operating income of 33.38/39.01/4564 billion yuan in 2024-2026, and realized net profit of 4.69/6.27/795 million yuan respectively; corresponding PE is 41/31/24 times, respectively. The company focuses on circuits such as semiconductors and new displays, focuses on “stuck neck” materials, and simultaneously builds technology platforms. Driven by the combined efforts of important products such as high-performance PI and photoresists, the company is expected to enter a period of transformation. First coverage, giving a “buy” rating.
Risk warning: Production capacity climbing falls short of expectations, downstream demand falls short of expectations, R&D progress falls short of expectations.