Master core technology and focus on digital printing for 30 years. The company was founded in 1992 and has been deeply involved in the field of digital printing for nearly 30 years. It is the first domestic enterprise to apply digital printing technology to textile industry production. The company's core technicians won the second prize of the National Technological Invention Award issued by the State Council in 2007 and 2017, respectively, and undertook or participated in 5 National High-tech Research and Development Plan (863 Plan) projects, 4 National Science and Technology Support Plan projects, and 1 national high-tech industry development project. The company promotes the application of equipment and consumables by providing customers with integrated digital printing solutions. The main products are digital direct jet printers, digital inkjet transfer printers, ultra-high speed industrial inkjet printers and inks. 2017-2023 revenue growth CAGR = 28.2%, net profit CAGR = 34.8%.

E-commerce overseas has taken the world by storm, and the trend of digital printing is accelerating. In the textile printing industry, textile digital printing technology is a breakthrough in traditional printing technology. It has the advantages of no net production, no mixing limit, no limit on printing volume, etc. At the same time, it also has the characteristics of green environmental protection, time saving, water saving, and electricity saving. This is in line with global development strategies for industrial upgrading, energy saving and emission reduction, and people's personalized consumption trends. According to data from the “In-depth Analysis of Global Textile Digital Inkjet Printing Development Status and Trends”, the share of global textile digital inkjet printing production increased from 2.2% to 7.6% of printed fabrics in 2014-2019, and the Chinese market increased from 1.8% to 11.2%. The China Printing and Dyeing Association expects the global digital printing penetration rate to reach 27% in 2025, and the penetration rate of digital printing in China will increase to 29%. Cross-border e-commerce is booming and boosting the rise of the digital printing industry. Cross-border e-commerce, represented by SHEIN, TEMU, and TIKTOK, has rapidly risen, setting off a fast fashion wave where small orders are returned quickly. Digital textile printing technology requires no net production, no mixing restrictions, and no printing volume restrictions. It fits perfectly with the industry trend and has entered a period of rapid development.

Outstanding competitive advantage, equipment+consumables, entering a stage of rapid production expansion. The company independently controls the most core software development and burning process, forming a unique core competitiveness. The core competitiveness of the company's digital inkjet printing equipment is consistent printing effect, stable operation, high speed operation and high cost performance. In addition to being affected by nozzle performance and equipment precision machining technology, it mainly depends on the integrated development of control assemblies, software/algorithms such as image data processing systems, precise motion control systems, inkjet control systems, electrical/communication channel systems, and mechanical control systems. The company has established an equipment+ink (consumables) business model, relied on the advantages of its own equipment to establish a good customer relationship, and subsequently achieved continuous revenue contributions from customers by providing ink. Recently, it plans to acquire ink outsourcing manufacturer Jingli Digital to further improve ink self-production rate and reduce ink costs; the company has a single variety of nozzles and concentrated procurement, forming a scale advantage and procurement cost advantages; in addition, for equipment with the same performance, the company's price is only 60-70% of the price of international competing companies such as MS and EFI, with obvious advantages.

Investment advice: The industrial wave promotes the rise of downstream demand, and the company's competitive advantage is outstanding, and the card position advantage is strong. We estimate that the company's net profit for 2024-2026 will be 456/598/798 million yuan, respectively, and the corresponding PE will be 30X/23X/17X, respectively. Covered for the first time, giving it a “Recommended” rating.

Risk warning: Overseas market risk, digital printing equipment core raw material nozzle mainly relies on outsourcing risk, and production expansion falls short of expected risk.