Key points of investment

Next Monday (April 22), there will be an inquiry for the new stock “Olay New Materials” on the Science and Technology Innovation Board.

Olay New Materials (688530.SH): The company's main business is R&D, production and sales of high-performance sputtering targets. The main products include copper targets, aluminum targets, molybdenum and molybdenum alloy targets and ITO targets. The products are used in semiconductor displays, touch screens, architectural glass, decorative coatings, integrated circuit packaging, new energy batteries and solar cells.

The company achieved revenue of 382 million yuan/392 million yuan/476 million yuan respectively in 2021-2023; YOY was 55.44%/2.50%/21.50%, and the three-year compound annual growth rate of operating income was 24.63%; net profit to mother was 50 million yuan/35 million yuan/49 million yuan, YOY was 129.07%/-30.03%/39.69%, and the three-year compound annual growth rate of net profit to mother was 30.82%.

Investment highlights: 1. The company is a domestic leader in sputtering targets for planar displays, and is deeply involved in sputtering targets for high-generation production lines above G8.5. The company is a leading sputtering target company in China, and the company's sputtering target business revenue ranked fourth in China in 2022. Sputtering targets can be widely used in the fields of flat display, architectural glass, integrated circuit packaging, etc. Among them, flat panel display is the core downstream application industry of the company's products, and the related revenue share remained above 70% during the reporting period; the company is the domestic leader in this field, ranking second in the country in terms of revenue scale in 2021 (the above rankings all come from the company's prospectus). In the field of flat display, the company is deeply involved in sputtering targets for high-generation production lines. During the reporting period, the company's sputtering targets accounted for more than 95% of the revenue for high-generation production line products above G8.5; according to the China Electronic Materials Industry Association, the company's G8.5, G10.5 planar copper targets, and G10.5 planar ITO targets were imported. 2. In addition to the core product copper target, the company actively expands products such as ITO targets, molybdenum and molybdenum alloy targets, and tantalum targets, and continues to enrich the product line. 1) The company is expanding the application of ITO targets in semiconductor displays and solar cells. In the field of semiconductor displays, the products passed the first set of product tests by Rainbow Optoelectronics in June 2023, are about to enter the mass supply stage, and have already entered the first product testing process for manufacturers such as Huake, Huaxing Optoelectronics, and Super Vision; in the field of solar cells, the products are already in the certification process of photovoltaic companies such as Huasheng New Energy and Juneng Electric Power. At the same time, the company's fund-raising project “High-end Sputtering Target Production Base Project (Phase I)” plans to add 140 tons/year to ITO target production capacity, which is more than ten times the ITO target sales volume of 12.56 tons in 2023, which is expected to support the rapid expansion of this product. 2) The company is ahead of peers in the development of new molybdenum alloy targets. It has now produced the first set of products and has entered the product certification stage for manufacturers such as Huike and BOE; this product can effectively block the thermal diffusion of copper atoms and meet the film characteristics requirements of 8K ultra-high-definition displays. The company's fund-raising project plans to add 90 tons/year of molybdenum and master alloy target production capacity, which is about 2.4 times the sales volume in 2023, which is expected to support the product's penetration increase as downstream display panel manufacturers upgrade their processes. 3) The company is developing high-purity tantalum targets for preparing barrier layer film materials in 90-65nm technology nodes and 12-inch wafer manufacturing, and plans to further develop trial production. 3. The company plans to extend to the upstream core raw material of high-purity oxygen-free copper. Copper targets are now the company's core product, accounting for more than 40% of revenue during the reporting period. Among them, high-purity oxygen-free copper was the core raw material for the manufacture of the company's products. In 2020-2022, the company's procurement amounts for high-purity oxygen-free copper were 87.327 million yuan, 16.0311 million yuan and 248.797 million yuan respectively, accounting for 48.92%, 51.07% and 73.13% respectively. The company has now successfully prepared small samples of high-purity oxygen-free copper plates. The fund-raising project “High-purity oxygen-free copper production base construction project” plans to add an annual production capacity of 3,840 tons of high-purity copper ingots and 6577 tons of oxygen-free copper sheets and copper tubes. In the future, related high-purity oxygen-free copper will mainly be used in the production of copper targets for planar displays.

Comparison of listed companies in the same industry: The company is mainly engaged in R&D, production and sales of high-performance sputtering targets, and selected A-share listed companies with the same main products as the company, Jiang Feng Electronics, Ashichuang, and Longhua Technology as comparable companies for Ole New Materials. Looking at the comparable companies mentioned above, the average revenue scale (TTM) of the industry is 1,964 billion yuan, the comparable PE-TTM (excluding outliers and arithmetic average) is 54.40X, and the gross sales margin is 21.57%. In comparison, the company's revenue scale is lower than the industry average, and the gross sales margin is close to the industry average.

Risk warning: There is still a possibility that companies that have begun the inquiry process will not be able to go public due to special reasons; company content is mainly based on the content of prospectus and other public information; there is a risk that the selection of listed companies in the same industry is not accurate enough; there may be interpretation deviations in the selection of content data. The specific risks of listed companies are shown in the text.