The company plans to raise an additional 700 million yuan for project construction and supplementary working capital, while maintaining the leading position in the display field, actively develop new products, layout new areas, and further expand the company's business scope. While the company continues to sell new products such as quantum dot film, composite film and solar backplane film, we maintain an EPS forecast of 0.80 pounds per share in 2020-2022 and maintain a "buy" rating.
The company plans to raise an additional 700 million yuan for project construction and supplementary working capital. The company announced that it intends to issue no more than 46560150 shares to no more than 35 specific targets, and the total amount of funds raised shall not exceed 700 million yuan. Among them, 300 million yuan is to be used for the construction project of optical film production base, the total investment of the project is 370 million yuan, 200 million yuan is to be used for the construction project of solar packaging film production base, the total investment of the project is 290 million yuan, and 200 million yuan is intended to supplement working capital.
Fund-raising projects are expected to further enhance the company's profitability. Optical film industry as the upstream of liquid crystal display industry, the consumption growth of display terminal drives the market demand of optical film to rise continuously. According to Omida data, the global market demand for mainstream display panels TFT-LCD and OLED panels will reach 3.199 billion in 2020, and it is estimated that the total global market demand will exceed 3.5 billion by 2024. The construction project of optical film production base will improve the automation and intelligent manufacturing level of the company's production line and enhance the company's profitability by introducing technologically advanced production technology and equipment. As the upstream of the solar photovoltaic industry, the solar packaging film industry benefits from the expanding construction demand of the photovoltaic industry. According to the statistics of the China Photovoltaic Association, the new installed capacity of global photovoltaic in 2020 is about 130GW, an increase of 13.0% over the same period last year. It is conservatively estimated that the new installed capacity of global photovoltaic will reach 270GW in 2025. The implementation of the solar packaging film production base construction project will further extend the company's industrial chain, cultivate new profit growth points for the company, enhance the company's profitability and overall competitiveness, and promote the sustained, steady and rapid development of the company.
The company set up a wholly-owned subsidiary Anhui Jizhi, the holding subsidiary Tianyuan New Materials, and the holding subsidiary Ningbo Jiyang set up a wholly-owned subsidiary Xiangshan Jiyang to improve the strategic layout of the company. The company plans to set up a wholly-owned subsidiary, Anhui Jizhi, with a registered capital of 100 million yuan, which is mainly engaged in the research, development, production and sales of special equipment for solar packaging film and solar packaging materials. Ningbo Jiyang, a subsidiary of the company, plans to set up a wholly-owned subsidiary Xiangshan Qiyang with its own funds or self-raised funds of 30 million yuan, which is mainly engaged in the technical research and development, production and sales of solar photovoltaic materials and its products, as well as technical consulting services. The establishment of Xiangshan Qiyang will further meet the growing customer needs of Ningbo Qiyang, help to improve the development quality of Ningbo Qiyang and enhance its comprehensive competitiveness. The company plans to invest 26.5 million yuan to set up Tianyuan New Materials, a holding subsidiary, with a stake of 53%, while Jiangbei Guangyuan, Jiangbei Tianyuan, Hongming Electronics and Huayue Investment hold 24%, 11%, 9% and 3% respectively. Tianyuan New material is mainly engaged in the R & D, production and sales of adhesive products and optical adhesive, and its establishment is expected to effectively integrate the superior resources of all parties, so as to expand the company's new business areas, accelerate the company's strategic layout, and achieve win-win cooperation.
Risk factors: shrinking downstream demand; intensified market competition; less-than-expected new business expansion; raw material price fluctuations.
Investment suggestion: while maintaining the leading position in the display field, the company actively develops new products, lays out new areas, and further expands the company's business scope. While the company continues to sell new products such as quantum dot film, composite film and solar backplane film, we maintain a new profit growth point. We maintain the company's EPS forecast of 0.80 EPS 1.42pm per share in 2020-2022, maintaining a "buy" rating.