Key investment points

The share of high-end products is gradually expanding. Film capacitors are widely used in various industries such as home appliances, communications, power grids, rail transit, industrial control, lighting, and new energy (photovoltaics, energy storage, wind power, new energy vehicles), etc., and are basic electronic components. In the future, market competition in China's film capacitor industry will shift from expanding product production lines to strengthening technical services and improving brands.

Ultra-thinness, high temperature resistance, high energy density, safety and reliability will become the main development trends. Simple and mass production will develop in the direction of small batches and customization, and the proportion of high-end products in all products will increase year by year. Most of the company's revenue comes from the new energy sector (such as new energy vehicles, photovoltaics, energy storage, wind power, etc.), which strongly supports the development of the global new energy sector.

Independent research and development of raw materials, full coverage of downstream application areas. The company has a complete range of products, covering a full range of PCB film capacitors, AC film capacitors and power electronics film capacitors to meet the needs of various industries such as industrial control, photovoltaics, energy storage, wind power, new energy vehicles, rail transit, smart grids, home appliances, and lighting. The company has achieved independent R&D and production of metallized film materials for film capacitors, and has established Farah's unique equipment and material supply chain system through cooperative development and continuous internal innovation, which can keep up with market demand and achieve iterative product upgrades and product originality development.

Accelerate the layout of overseas factories. The establishment of a wholly-owned subsidiary in Hungary is an important layout for the company based on its overseas development strategy. It is conducive to promoting exchanges and cooperation between the company and overseas markets, enhancing the company's comprehensive strength, and enhancing the company's core competitiveness.

Investment advice:

We expect the company's 2024-2026 net profit of 1.1/1.4/1.6 billion yuan, covering the first “buy” rating.

Risk warning:

Production capacity expansion falls short of expectations; industry competition increases risks; raw material prices fluctuate; downstream demand falls short of expectations; risk of exchange rate fluctuations.