Scarce targets in the target industry
The company is one of the few full-range suppliers in the domestic display panel field that can provide metal targets, ceramic targets and evaporation materials for panel display industry at the same time. The target business accounts for more than 70% of the company's H1 main business income and gross profit in 2019, which is the main source of revenue and profit contribution of the company. At present, we have established cooperative relations with well-known enterprises such as Beijing Oriental, Qunchuang Optoelectronics, Lance Technology, Bourne Optics, Crystal Optoelectronics and so on. Due to the professionalism of PVD coating, customers have strong stickiness. The company has successfully achieved stable supply to many production centers of BOE, especially in the projects of aluminum target, molybdenum target and ITO ceramic target.
PVD coating industry is subject to international oligopoly, import substitution has become a trend.
In the fields of flat panel display, semiconductors and solar cells, the global market for high-end PVD coating materials is still dominated by manufacturers in the United States, Japan and Germany. In 2017, international leading enterprises represented by Honeywell International Inc, Nippon Mining Metals, Dongcao and Plex accounted for about 80% of the global target market. At present, the company and a few domestic enterprises have successfully cut into the production of high-end PVD coating materials, in the national policy support and domestic cost advantages, import substitution will become a trend.
There are plenty of patents in reserve, waiting for the production capacity to be released.
The company continues to focus on the technical research and development of PVD coating materials, and actively cooperates with well-known universities to promote the transformation of industry-university-research. In 2018, the company invested 10.87 million yuan in R & D, accounting for 4.24% of the company's operating income. By the end of 2018, the company has obtained 34 patents. The company's current products cover silicon, niobium, molybdenum, copper, aluminum, silver, gold, ITO and all kinds of alloys and other targets. At present, limited by the company's production capacity, the products are in a state of diversified and balanced development. after the future capacity expansion, the company's products are expected to blossom and blossom.
Power flat panel display market, 350 tons of new production capacity for fund-raising projects
In 2016, the global market for high-purity sputtering targets is about US $11.36 billion, of which the target for flat panel display is US $3.81 billion, accounting for more than 30%, which is the largest application market for targets. In 2018, China's flat panel display market reached 13924.2 million square meters, a year-on-year growth rate of 9.9%, accounting for more than 70% of the global market. The domestic panel brands represented by BOE, Huaxing Optoelectronics and Deep Tianma have a great influence in the market, and under the support of national policies and domestic cost advantages, it is expected to increase the procurement of domestic targets. At present, the annual production of 350 tons of flat panel display sputtering target project raised by IPO is expected to be completed by the end of 2020 to meet the needs of the company's current orders on hand. According to the forecast in the prospectus, after the project reaches production, the average annual profit is expected to reach 81.31 million yuan, and the overall performance of the company will achieve a big leap-forward growth.
Investment suggestion
It is estimated that the EPS of the company from 2019 to 2021 is 0.11,0.28,0.52 yuan respectively, and the PE of the corresponding share price is 278.1 times, 109.6 times and 59.6 times respectively. Taking into account the company's industry status and future growth, the company is given a "buy" rating.
