The company adopts a “2+3+4" R&D, production and marketing integration layout to establish good cooperative relationships with major domestic and foreign customers:
The company currently has two major production bases: Linhai headquarters, 3 R&D centers in Zhangjiang, Shanghai and Taixing, Jiangsu, 4 sales centers, and 4 major divisions for flame retardants, amine additives, catalysts, and paint additives. It also has Wansheng sales subsidiaries in Europe, the United Kingdom, the United States and Hong Kong, building a global sales network. At present, the company has established long-term cooperative relationships with well-known companies such as Bayer, Dow Chemical, Covestro, BASF, and Blonde Technology.
Nangang Steel Co., Ltd. and Fosun Group settled in to help the company develop in the future: in 2021, Nangang Steel Co., Ltd. transferred 70 million shares of tradable shares from Wansheng to another 107.8 million shares of listed companies. After the issuance was completed, the shareholding ratio of Nangang Steel Co., Ltd. reached 29.98%. As the controlling shareholder of the company, the actual controller was changed from a member of the Gao Xian family to Guo Guangchang. Guo Guangchang is the actual controller of Nangang Steel Co., Ltd., and holds 85.3% of Fosun International Holdings Ltd's shares. The company's flame retardant and specialty amine business will be deeply compatible with Fosun.
Production capacity of phosphorus-based flame retardants is limited, and NEV/5G/European halogen-free policies need to boost industry sentiment: environmental requirements and bromine resource distribution reduce the market share of bromine flame retardants. Phosphorus-based flame retardants fully benefit from the cost advantages brought about by the expansion of PC production capacity, engineering plastics demand brought about by lightweighting+charging pile construction+5G base station construction for new energy vehicles. In addition, the European halogen-free policy accelerates the process of replacing phosphorus-based flame retardants. The company is the largest supplier of phosphorus-based flame retardants in the world. In 2020, it had a production capacity of 65,000 tons of engineering plastics flame retardants and 50,000 tons of polyurethane flame retardants, totaling 115,000 tons. In 2021, the production capacity of engineering plastics flame retardants will reach 80,000 tons and polyurethane flame retardants 50,000 tons, for a total of 130,000 tons. Under the premise that other manufacturers in the industry are slowly investing in production capacity, the high boom in the phosphorus-based flame retardant industry will lead to a sharp rise in the company's volume and price.
The specialty amine and paint additives division will become a growth point for the company's future performance: the global market demand for fatty amines is over 7 million tons and is widely used in pharmaceuticals, chemicals, and cosmetic fields. The company's amine additives and catalysts have an annual design capacity of 40,000 tons, the first phase of the catalyst design capacity is 15,000 tons, and the actual production capacity is about 12,000 tons in 2020. Actual production capacity is expected to increase to 15,000 tons in 2021. The second phase will increase 15,000 tons of tertiary amines and 10,000 tons of quaternary ammonium salts and 2,000 tons of trioctylamine. At present, it has established stable trade with international giants in the petrochemical industry relationships ; In 2020, the market size of China's heavy anticorrosive coatings industry reached 93.78 billion yuan. The company's paint additives division currently has a production capacity of 40,000 tons, a wide range of anticorrosive coatings, and there is still 40,000 tons of production capacity to be launched in the future.
Profit forecasts and investment recommendations. The 2021-2023 EPS is expected to be 1.80, 2.36, and 2.66 yuan respectively, corresponding to 13, 10, and 9 times PE, respectively, and will continue to be given a “buy” rating.
Risk warning: risk of projects falling short of expectations, risk of fluctuations in raw material prices, risk of exchange rate fluctuations.
