China's organic pigment track champion, the growth space is gradually opened. The company's main products are classical and high-performance organic pigments, which are widely used in ink, paint and plastic coloring. As a leading enterprise in China's organic pigment industry, the company currently has an annual production capacity of 40,000 tons of organic pigments and 10,000 tons of matching intermediates, with more than 200 specifications and full chromatographic production capacity, which can meet the needs of downstream differentiation. China is a leading manufacturer of organic pigments with both scale, industrial chain integration and category advantages.
Environmental protection and safety supervision policies become stricter, small, scattered and non-standard enterprises continue to be eliminated, and the organic pigment industry accelerates agglomeration. The company currently has a global market share of 10%, and the industry leader has a lot of room for improvement.
Expand the production of environment-friendly, high-performance organic pigments to open the space for medium-term growth. According to the Professional Committee on Organic pigments, the global production of pigments is about 1 million tons, of which about 400000 tons are organic pigments, including classical organic pigments and high-performance organic pigments. At present, the proportion of global production of high-performance organic pigments is about 15-20%, but the proportion of sales is about 40-50%, and is growing at a relatively rapid rate of about 10%. With high added value and technical barriers, the market is mainly monopolized by foreign enterprises such as BASF of Germany, Clariant of Switzerland, DIC of Japan and so on. High-performance organic pigments not only have the characteristics of bright color and strong coloring power of classical products, but also have better light and heat resistance, safe and environmentally friendly, and the demand for medium and high-grade coatings is growing rapidly. The company has a production capacity of 13000 tons of high-performance organic pigments, accounting for about 1x3 of the output. Including DPP, azo condensation, benzimidazolone, quinacridone, isoindoline, dioxazine and so on. In the future, we expect the company will continue to expand production capacity in high-barrier, high-profit, high-growth varieties such as DPP, permanent Violet and Quinacridone, so as to open up short-and medium-term growth space.
Extend to the upstream and downstream of the industrial chain to form integration and open up long-term space. Pigment industry chain upstream for basic chemical materials and intermediates, downstream color paste, color masterbatch, used in ink, paint, plastic, rubber and other industries. The quality and supply stability of intermediates are very important to pigment production and make a significant contribution to profits. In this regard, the company has continued to extend the upstream intermediates in recent years, and most of the key intermediates needed in the production of high-performance pigments, such as 4-chloro-2, 5-dimethoxyaniline (4625), chromophen series, DB-70, DMSS and so on, are self-produced. At the same time, the industrial chain of the long-term company has the space to extend the industrial chain to the downstream color paste and raw liquid coloring, and the long-term growth path is clear.
Profit forecasts and valuation recommendations. We estimate that the operating income of the company from 2020 to 2022 will be 2.007, 25.98 and 2.945 billion yuan, respectively, and the estimated net profit will be 2.50, 356,0.36 million, equivalent to 0.79, 1.12, and 1.37 per share, respectively, corresponding to 21.8, 15.3, 12.5 PE, respectively, and the net profit is estimated to be 436 million, equivalent to 0.79, 1.12, and 12.5 times of PE, respectively. Considering the continuous launch of the company's high-performance pigment production capacity and intermediate production capacity, the industry chain extends upstream, profitability and growth will be significantly improved, covering for the first time and giving a "buy" rating.
Risk tips: rising prices of raw materials, shrinking market for organic pigments, declining industry concentration and intensified competition.