A leader in specialty rubber additives and semiconductor photoresists, building a platform-based enterprise with a multi-business layout
The company is the world's leading integrated service provider for new materials. The downstream covers the fields of automobiles, display panels, semiconductors, etc. The company's main business is divided into three business segments: electronic materials, special materials for automobiles/tires, and fully biodegradable materials. At present, the company has formed good cooperative relationships with many well-known downstream customers, and the penetration rate continues to increase.
A leading domestic semiconductor photoresist company, ArF photoresist/EBR breakthroughs are expected to drive revenue growth. As a leading domestic semiconductor photoresist company, G-line and I-line photoresist products have been widely used in domestic integrated circuit production lines. There are more than 20 types of KrF photoresist products, providing a stable supply to major domestic chip manufacturers. Furthermore, the company's ArF photoresist has been developed and mass-produced. In addition, the EBR solvent produced by the company has a large-scale production capacity of 20,000 tons per year. It has reached G4 grade specifications, and the verification of its G5 grade products is progressing smoothly. With the shipment of the company's ArF photoresists and EBR products to clients, the company's electronic materials revenue is expected to grow further.
It is proposed to build a “semiconductor chip cash polishing pad project” to further enrich the electronic material product layout based on the company's long-term development plan and business development needs. The company's subsidiary Shanghai Tongcheng Electronic Materials Co., Ltd. signed a “Cooperation Agreement” with the Jiangsu Jintan Hualuogeng High-tech Industrial Development Zone Management Committee on May 27, 2024 to invest in the construction of a semiconductor chip polishing pad production base in the Jintan Hualuogeng High-tech Industrial Development Zone in Jiangsu Province. The agreement was registered and invested 300 million yuan, mainly engaged in the R&D, production and sales of semiconductor chip polishing pads. The project successfully reached post-delivery Annual production of 250,000 advanced semiconductor chip polishing pads has been achieved, and annual sales are expected to be about 800 million yuan after full production. As one of the important materials in the semiconductor process, advanced polishing pads for semiconductor chips have a broad market scale. The performance of products currently being developed shows strong technological leadership. After mass production, they can provide the company with new business growth points and continuously improve the company's profitability.
The world's leading supplier of special materials for tires, and the tire business can be expected to recover. As the world's leading supplier of specialty materials for tires, the company occupies a leading position in the industry for high-performance phenolic resin products. Stable cooperative relationships have been established with the world's top 75 tire companies, covering many well-known international and domestic brands. At the same time, the company is a key supplier of “p-tert-butylphenol” in Asia, serving top customers in the polycarbonate industry. With the recovery of the downstream market, the company's revenue from specialty materials for tires is expected to increase.
Promote environmental innovation, strategically cooperate with BASF, and actively deploy biodegradable materials companies as leading domestic leaders in the production and processing technology of fully biodegradable materials. Through cooperation with BASF, they have successfully implemented a 100,000 tons/year project (actual construction of 60,000 tons) at the Shanghai Chemical Park, marking significant progress in the field of high-end biodegradable products. Using this technical foundation, the company carried out R&D and demonstration promotion for different application fields (such as agricultural mulching, express packaging), and also actively participated in key national R&D projects and standard formulation, demonstrating leadership and innovation ability in solving single-use plastic pollution and promoting the development and application of environmentally friendly materials. With the rapid development of the biodegradable materials market, the company has established a solid position in the industry and contributed significantly to the future development of the environmental protection industry.
Investment advice
We expect the company's net profit to be 488/586/704 million yuan from 2024 to 2026, and the corresponding PE is 38x/32x/26x, giving the first coverage a “gain” rating.
Risk warning
Risks such as market demand falling short of expectations, intensifying industry competition, and falling short of expectations in the promotion of new products.