Recently, the company's market attention has increased rapidly, focusing on the implementation progress of the company's fund-raising projects, the latest progress of high-tech business, the company's long-term growth and other issues. The purpose of this paper is to track the current situation of the company and give our understanding of hot issues. We believe that the current fluctuation of raw material prices and the difficulty of finding a box of shipping containers is only a short-term disturbance for the company. in the long run, the company's greatest advantage comes from the fine management of the whole industry chain. as the traditional business continues to expand + high-tech business to break through barriers and then expand production through the existing model, the company's long-term growth will be more clear, we are optimistic about the company's long-term growth and maintain the "buy" rating.
How to treat the impact of the price increase of BOPP and other raw materials on the company? the company produces more than 80% BOPP film, and the impact of raw materials will continue to decline in the future. In the cost composition of the company's largest business OPP tape, BOPP accounts for about 55%, and glue accounts for about 45%. The direct raw materials include PP particles (BOPP film), resin, rubber and so on. At present, a total of 18 coating lines have been put into production in the company's OPP business, and one film drawing line can provide 15 BOPP films for coating lines, with a coverage rate of about 83%. In the long run, with the gradual commissioning of the next three BOPP film drawing lines, the related impact will decline rapidly.
"one case is difficult to find" has an impact on the company's geometric increase in domestic market share, while the relevant situation has a limited impact on the company.
The company accounts for a relatively high share of overseas revenue, in the context of the strong recovery of overseas demand, the current freight rates remain high and the supply of maritime containers is still tight. Throughout the year, it is expected that with the recovery of overseas economies after the epidemic and the arrival of the traditional peak season, the Q3 transport chain will remain tight until 2021, and the transport problem may be effectively solved with the arrival of the Q4 off-season. In terms of coping strategy, on the one hand, the main mode of trade for the company's export customers is FOB, and the impact of the price increase on the company is limited, and the company also actively negotiates with the local government to deploy empty cabinets and work overtime. On the other hand, the company has actively expanded the domestic market in the past three years. From 2018 to 2020, the proportion of domestic revenue and gross profit were 26.85%, 34.17%, 33.43% and 16.65%, respectively. After the Shandong production base was put into production at the beginning of 2022, it is expected that the share of domestic sales will further increase, and the related impact will be further reduced.
The company's traditional business & high-tech business how to coordinate the development of traditional business scale and optimize the profit structure of high-tech business in the future to maximize the advantages of the whole industry chain. The company has ploughed for 19 years in the highly competitive field of civil adhesive tape and has accumulated rich experience in management and industrial chain layout: in the field of cloth / paper-based tape, the company has completed the coverage of the whole industrial chain from weaving / papermaking to the downstream. In the field of OPP tape, where the profit margin is relatively meagre, the company has laid out the production capacity of film drawing line upstream, which is expected to increase the gross profit space of 10% to 15% for the company. In the field of high-tech business, the company continues to lay out in automotive, medical, electronic, biodegradable and other fields, through the division model to break through sales, technology, channel barriers, and then through the existing model to expand production, give full play to the synergy advantages of the whole industry chain, and optimize the company's profit structure to the maximum extent.
The company's positioning and future development of each base of the four major bases, respectively corresponding to high-tech business research and development, the southern market, the northern market, the global market. (1) Shanghai: as a research and development center of strategy, finance, new plate business department, etc.; (2) Jiangxi: major production center, convenient transportation, undertaking most production projects, undertaking company investment, self-financing expansion projects, and most export business; (3) Shandong: radiating the northern region, there is a film drawing line, which is scheduled to be put into production by the end of 2021, and will continue to extend the downstream industrial chain in the future. (4) Vietnam: assist the company to expand its overseas business and avoid the adverse effects of imposing tariffs.
How to judge the company's domestic / global competitive advantage the company is already the largest supplier of 3M in China, the future cooperation will be advanced, and the biggest advantage of domestic competition comes from the whole industry chain. In terms of the global situation, 3M and other global industrial leaders occupy most of the market share, especially monopolizing the domestic and foreign middle and high-end tape markets. as the only top 10 suppliers of 3M in China, the company supplies more than 50% of 3M civil tape. We expect that with the promotion of the company's high-tech business, the company's cooperation with 3M and other international companies will be promoted to high-end and large-scale. In the domestic market, as the leader of the whole industry chain, the biggest advantage of the company lies in the fine management experience of the whole industry chain with many subdivided products, the traditional business will continue to expand with the support of capital, and the high-tech business will open up a new track for the company.
Risk factors: the risk of fluctuations in raw material prices; the risk that overseas sales are lower than expected due to the COVID-19 epidemic; the release of new production capacity is not as expected; and downstream demand growth is not as expected.
Investment suggestion: considering the accelerated expansion of the company's traditional business and the gradual landing of the company's medium-and long-term high-end projects, we are optimistic about the company's traditional business expansion advantage + active layout of high-end areas. Its leading position in the domestic adhesive tape industry is expected to be further strengthened, and short-term performance is expected to achieve a breakthrough. We maintain the company's 2021-2023 net profit forecast of 2160.265pm 346 million yuan, corresponding to the EPS forecast of 1.30Universe 1.59exp 2.01 yuan. Give the company 2021 23xPE, maintain the target price of 30 yuan, and maintain the "buy"
Rating.