The company is a leading domestic carbonyl iron powder enterprise with outstanding process advantages. The growth rate of emerging applications such as downstream folding screen hinges, high-power inductors, high-frequency motors, intelligent automotive suspensions, 3D printing additives, and electromagnetic shielding can be expected. At the same time, the company's independent innovation process at its Ningxia base is expected to speed up the replacement of low-cost carbonyl iron powder to high-end ultrafine atomized iron powder and electrolytic iron powder.

We have been deeply involved in micro-nano metal powders for 20 years, and the five major product lines complement each other. The company was founded in 2004 and is a high-tech enterprise located in the upstream of powder metallurgy. The company's products cover five major categories: carbonyl iron powder, atomized alloy powder, soft magnetic powder, metal injection molding feed and wave absorbing materials. The downstream covers various fields such as powder metallurgy, 3C precision parts, electronic components, soft magnetic materials, diamond tools, stealth materials, etc., and has a wide range of applications.

The technical threshold for carbonyl iron powder is high, the competitive pattern is good, and the emerging downstream growth can be expected. Iron carbonyl powder has high purity and few impurities, and is regarded as the best metallurgical additive. The industry has a high concentration, CR3 is about 60%. In the global carbonyl iron powder market, the company's market share exceeds 20%; in the Chinese carbonyl iron powder market, the company is in a leading position with a market share of nearly 50%. Carbonyl iron powder is not only a raw material for the company's soft magnetic powder and other products, but also a high-quality material for downstream customers to make AI chip inductors, high-frequency motor cores, and intelligent automotive suspension parts. Competition in the atomized alloy powder industry is scattered. The main downstream applications are MIM to manufacture 3C structural parts, communication base structural parts, tool products, mobile phone exterior parts, and 3D printing materials.

Alloy soft magnetic powder is one of the soft magnetic materials with the best comprehensive performance today. The downstream mainly uses new energy inductors.

MIM feeding benefits from the rapid growth of folding screen hinges. Wave-absorbing materials are widely used in the military and civilian markets. All three can be made from carbonyl iron powder and atomized alloy powder as raw materials according to different ratios and processes. Soft magnetic powder is mainly used to manufacture metal soft magnetic powder cores and inductive components. Applications include photovoltaics, energy storage, new energy vehicles, charging piles, inverter air conditioning, UPS, etc. The total global demand is expected to reach 316,000 tons by 2026, with a CAGR of 25%. MIM feeding requirements may increase significantly with the volume of folding phones. High-performance wave-absorbing materials are used in stealth materials, RFID electronic tags, electromagnetic shielding and pollution inhibitors, etc., and may usher in a broad market space.

The company's leading advantage is becoming more and more prominent, and the product performance is leading the world. The company accounted for more than 20% of the world's carbonyl iron powder production capacity in '23. When the new project is put into operation, the company's market share is expected to increase further and surpass the global leader BASF. The company's products are widely recognized by customers at home and abroad. Compared with competitors, the company's carbonyl iron powder has excellent key properties and has reached the leading global level. The particle size is 0.3 microns smaller than the parameters of overseas competitors, which can better reduce the power consumption of downstream products. Compared with domestic peers, the company has technical advantages such as high fine powder rate, high raw material conversion rate, and stable quality in each batch.

Reducing costs and increasing efficiency means atomizing iron powder to explore the dark and bright path at a cost. In order to break through the current situation where carbonyl iron powder is limited to the middle and high-end fields due to its high cost and production difficulty, the company strategically laid out an industrial base in Ningxia, independently developed innovative processes, and drastically reduced the cost of carbonyl iron powder, so that carbonyl iron powder can compete with high-end ultra-fine atomized iron powder, electrolytic iron powder, etc. The market penetration space is considerable, and future demand may maintain a high growth rate.

First coverage, giving a “Highly Recommended” investment rating. The company's net profit due to mother in 2024-2026 is estimated to be 0.98, 1.35, and 181 million yuan, respectively, and the corresponding PE is 31.5, 22.9, and 17 times, respectively.

Risk warning: Downstream consumer electronics demand falls short of expectations, new construction project expansion falls short of expectations, risk of shareholder holdings reduction, etc.