occurrences

The company announced that it plans to raise no more than 0.31 billion yuan in capital to the actual controller, mainly for the “special nanopigment dispersion project for LCD display photoresist with an annual output of 5,000 tons”. At the same time, the company announced a shareholder return plan for the next three years (2025 to 2027). We expect the company's net profit to be 0.19/0.34 billion yuan in 25/26, maintaining a “buy” rating.

The main situation of fixed increases

1. The number of shares issued this time shall not exceed 10.22% of the total share capital of the company before the issuance. After the issuance, Jiangsu Fenghui's shareholding ratio will increase from 16.98% to 24.67%, and the share of actual controllers will increase dramatically.

2. The fixed issue price is 9.41 yuan/share (75% of the 10/17 closing price).

3. Capital investment: It is planned to invest 0.26 billion yuan (including 0.23 billion yuan raised this time) for a special nanopigment dispersion project with an annual output of 5,000 tons of LCD display photoresist. The first phase of 1,000 tons is expected to be completed by the end of December 2025; the second phase of 4,000 tons is expected to be completed by the end of December 2027.

4. Expected benefits of the project: After delivery, the company can achieve annual revenue of 1.05 billion yuan and annual net profit of 0.145 billion yuan (the static forecast is conservative).

Photoresist colorants are the key materials for stuck necks. The company is a mass production project 1. Industry: Although China has made breakthroughs in display photoresists in recent years, color adhesives in display photoresists are basically monopolized by Japanese and Korean companies (accounting for more than 75%). The localization rate of colored glue in China is only 15%, and there is an urgent need for localization and industrial chain support.

2. Company: Since 2018, the company has set up a professional R&D team to focus on nanopigment dispersions for LCD color photoresists. Over the past 6 years, it has accumulated a deep accumulation and related patents have been announced. Currently, it has an annual production capacity of 500 tons. This fixed increase in production indicates that the product is about to enter mass production.

3. What are the advantages of the company making photoresist pigment dispersions? The preparation technology and process are similar to the company's process. The core is ultra-fine processing technology, which has more stringent requirements in terms of raw material quality control, particle size and distribution, nanoparticle stability, light resistance, and saturation.

Continue to be optimistic about the company's medium- to long-term growth and maintain a “buy” rating

Investment advice: The company is expected to enter a year of capacity implementation and performance contribution in 25-26, and there have been breakthroughs in domestic substitution for some products. Considering the time of project implementation, we lowered the company's profit forecast. The company's net profit for 24-26 is 0.06, 0.19, and 0.34 billion yuan (previous values of 0.19, 0.35, and 0.49 billion yuan), respectively, to maintain a “buy” rating.

Risk warning: risk of fluctuations in raw material prices, management risks due to scale expansion, risk of proposed changes in control, fund-raising projects falling short of expectations