The company is 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.

2021-2024Q1, the company's revenue was 0.467 billion yuan, 0.522 billion yuan, 0.644 billion yuan, and 0.165 billion yuan, respectively, up 43.14%, 11.90%, 23.28%, and 38.46% year-on-year, respectively; net profit after deduction was 0.095 billion yuan, 0.11 billion yuan, 0.134 billion yuan, and 0.044 billion yuan, respectively, up year-on-year 42.99%, 16.02%, 21.47%, 108.28%.

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 0.398 billion yuan, accounting for 61.82% of the company's revenue, up 30.21% year on year. Among them, the revenue of NEV industry customers was 0.151 billion 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.

Set up a Mexican factory to further expand the international market. In 2023, the company achieved sales revenue of 0.154 billion 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. The company will mainly target customers in North America, South America and other regions, including various industries, such as automobiles, construction machinery, communications electronics, etc. The layout of overseas production bases will help the company further expand the international market.

Profit forecasting and valuation. We estimate that the company's net profit for 2024-2026 will be 0.18, 0.235, and 0.304 billion yuan, respectively, and the corresponding EPS will be 3.21 yuan, 4.19 yuan, and 5.44 yuan, respectively. Referring to companies in the same industry, we gave the company 35-38 times PE in 2024, with a corresponding reasonable value range of 112.35-121.98 yuan, giving it a “superior to the market” rating. Risk warning. Raw material prices fluctuate, downstream demand falls short of expectations, and macroeconomic fluctuations.