Main points of investment:
Domestic high-performance filter materials leading enterprises, steady revenue growth. The main products are air conditioning filter, air purifier, automobile / rail transit air filter, air conditioning wind wheel, total heat exchanger, etc., of which air filter accounts for more than 50%. The company's revenue increased from 419 million yuan in 2015 to 649 million yuan in 2019, with a compound annual growth rate of 11.6%. Net profit increased from 52 million yuan in 2015 to 80 million yuan in 2019, with a five-year compound growth rate of 11.5%.
China's air filter industry has many enterprises and fierce competition, but the industry concentration is relatively high, and the market share is mainly concentrated in Jinhai Environment, Zhejiang Lanbo Air conditioning and Ningbo New Century Science and Technology. International competitors are: Tamura Kui Co., Ltd. and Apollo Trading Co., Ltd. The company's customers cover 80% of the relevant downstream Japanese enterprises and have been widely recognized.
With the outbreak of COVID-19, the public has higher and higher requirements for air quality. on the one hand, it gives birth to the demand for air conditioning cleaning and filter replacement, on the other hand, it pays more attention to the germicidal efficacy of the filter. First of all, the frequent occurrence of extreme weather has stimulated the growth of global air conditioning demand; second, compared with the household ownership of ice washing products, air conditioners still have more room to improve; third, the domestic air conditioning market is transitioning from the incremental stage to the stock stage, and upgrading will become the first driving force for the development of the industry. If we assume that in the pessimistic / neutral / optimistic case, the renewal frequency of the air conditioning filter is every five years / three years / two years respectively, the renewal demand scale of the air conditioning filter can reach 1.1 billion yuan / 2.3 billion yuan / 3.5 billion yuan respectively, and the market space is huge. Thanks to the continuous R & D investment, at present, many models of the company's products have passed the test of Guangdong microbial Analysis and testing Center in terms of the efficiency of killing some types of viruses.
Vehicle purification products and household air purifiers are new growth points for the development of the industry. The amount of new energy vehicles used in vehicle air purification products is relatively high. if it is assumed that the sales of new energy vehicles account for 25% to 7 million vehicles in 2025, if the penetration rate is 50%, the incremental market is expected to exceed 1 billion yuan.
The company has been deeply ploughing the field of air control for many years, and is the leading enterprise of high-performance filter materials in China, and its products are widely used in the field of household appliances and vehicles. The company has a large number of high-quality customers such as Daijin, Sharp, LG, Fujitsu, Mitsubishi, Gree, etc., the customer structure is stable, and through continuous research and development of high-end products to enhance competitiveness. It is estimated that the net profit of homing from 2020 to 2022 will be RMB 1.07 billion respectively, covering it for the first time and giving it a "overweight" rating.
Risk tips: performance risk caused by demand changes in downstream industries; risk of fluctuation in raw material prices; risk of R & D brain drain
