A leading domestic enterprise of polymer modified protective materials. The company was founded in September 2004 and listed on the Shenzhen Stock Exchange in March 2024. The company is mainly engaged in the design, R&D, production and sales of polymer modified protective materials. Its main products include functional protective sleeves, etc., which are widely used in various fields such as automobiles, construction machinery, rail transit, communication electronics, etc. With good temperature resistance, UV resistance, flame retardancy, chemical resistance, etc., the company's main products provide safety protection such as wear resistance, insulation, impact resistance, shielding, explosion resistance, fire protection, and noise reduction in various fields. The company is close to downstream customers and has established six major production bases; in 2022, the production capacity of the company's functional protective casing equipment was 255,500 kilometers, and the production capacity of the main functional monofilament equipment was 1936.75 tons.
The company's performance grew steadily, and net profit after deducting 2024Q1 increased 108.28% year on year. 2021-2024Q1, the company's revenue was 467 million yuan, 522 million yuan, 644 million yuan, 165 million yuan, respectively, up 43.14%, 11.90%, 23.28%, and 38.46% year-on-year; net profit after deduction was 95 million yuan, 110 million yuan, 134 million yuan, and 44 million yuan, respectively, up 42.99%, 16.02%, 21.47% and 108.28% year-on-year respectively. The increase in 2024Q1's revenue was mainly due to increased sales in the automotive industry (new energy enterprise) and the communications electronics industry. The increase in net profit after deduction was mainly due to increased order demand, the company's production capacity was released, and the scale effect was further reflected. The increase in the company's gross profit led to an increase in net profit. 2024Q1, the company's gross sales margin was 49.36%, up 5.05pct year on year; net sales margin was 27.65%, up 9.49pct year on year.
Automobile exports have increased significantly, and the market space for functional protective sleeves is huge. Automobiles are the main application area of the company's products. In 2023, the company's sales revenue from the automotive sector was 398 million yuan, accounting for 61.82% of the company's revenue, up 30.21% year on year. Among them, revenue from NEV industry customers was 151 million yuan, up 44.61% year on year. Significant growth in China's automobile exports is driving the development of the automobile industry. In 2023, China's annual automobile exports reached 4.91 million vehicles, an increase of 57.9% over the previous year, and the contribution rate of exports to total domestic automobile sales growth reached 55.7%. Due to the development and export growth of China's automobile industry and the market application base of functional protective tubes, the company's product market is expected to have huge room for development.
The company has advantages in technology research and development to gradually raise the level of localization. The R&D and production of polymer modified protective materials involves various aspects such as product formulation, process control, and process accuracy, and has high technical barriers. Through years of R&D and production experience, the company has mastered modified formulation technology for PET, PA, PP, PE and other materials, which can effectively improve the toughness, strength, stretchability, impact resistance, and flame retardancy of basic materials. As of the disclosure date of the 2023 annual report, the company has obtained 28 authorized invention patents and 113 utility model patents. At the same time, the company has passed some strict and complex supplier review procedures, accumulated a number of high-quality customers, established good cooperative relationships with many well-known terminal brands and component suppliers, and obtained certifications from many joint venture brands and domestic independent brand terminal OEMs. It is one of the few functional protective casing enterprises in China that have simultaneously entered the domestic, joint venture and foreign brand OEM supply chain systems, gradually improving the level of localization in segmented fields.
Set up a Mexican factory to further expand the international market. In 2023, the company achieved sales revenue of 154 million yuan in the overseas market, accounting for 23.98%; the gross margin in the overseas market was 52.73%, which is significantly higher than the domestic gross margin level of 40.42%. The company set up a subsidiary in Mexico and gradually carried out operational preparations such as plant leasing, industrial and commercial registration, talent recruitment, equipment procurement, and overseas supply chain development. Mexico Sun will mainly target customers in North America, South America and other regions, including various industries, such as automobiles, construction machinery, communications electronics, etc., and the layout of overseas production bases will help the company further expand the international market.
Risk warning. Raw material prices fluctuate, downstream demand falls short of expectations, and macroeconomic fluctuations.