The company is a manufacturer of plastic composite materials. The company's main products are mainly divided into airtight materials and flexible materials. Among them, airtight materials include drawing air cushion materials and inflatable yacht materials, which are mainly used in leisure fields such as paddling boards, gymnastics mats, inflatable yachts, etc., while flexible materials include tent materials and light box advertising materials. mainly used in traffic logistics, print advertising and other fields. In 2020, the company's total operating income was 369 million yuan, an increase of 16.11% over the same period last year, and its net profit was 108 million yuan, an increase of 24.20% over the same period last year.
The growth rate of the industry is fast, and the downstream market capacity is large. The company is in the industry of industrial textiles.
In downstream applications, industrial textiles involve a wide range of products; in the field of wiredrawing air cushion materials industry, according to the data of China Industrial Textiles Industry Association quoted in the company prospectus, China's wiredrawing air cushion materials have an annual compound growth rate of more than 30 per cent from 2014 to 2018, and it is estimated that the global market capacity will be about 1 billion US dollars by 2025. In outdoor tent applications, the global camping and station wagon market is expected to recover and grow at a compound annual growth rate of 8 per cent in 2021, reaching $59.6 billion in 2023. In the industry competition, the company's main competitors include Zhejiang Hailide New Materials Co., Ltd., which has a market share of 1.68% in 2019.
The sales volume of the main products is growing, and the profitability is relatively stable. From 2018 to 2020, the company's total operating income was 318 million yuan, 318 million yuan and 369 million yuan respectively, an increase of 21.16%,-0.16% and 16.11% over the same period last year, and the sales gross profit margin was 39.65%, 41.64% and 42.81% respectively. Among the company's various businesses, the wiredrawing air cushion material business is the company's core business, with gross profit margins of 56.60%, 56.70% and 53.81% respectively. Among them, the gross profit margin decreased significantly in 2020, mainly due to the combined impact of the COVID-19 epidemic on the industry and the decline in procurement prices of major raw materials. From 2018 to 2020, the gross profit margin of the company's inflatable yacht materials business was 35.71%, 34.59% and 35.66% respectively, and the sales volume was 3.3502 million square meters, 4.5382 million square meters and 6.2169 million square meters respectively.
Fund-raising projects promote capacity expansion. At present, the company has three main fundraising projects. 1) the annual output of 4.5 million square meters of wiredrawing base cloth construction project. The total investment of the project is 428 million yuan, the construction period is three years, and the estimated sales income is 396 million yuan after reaching production. 2) Technical renovation project of composite new materials used in high-performance industry. The project plans to carry out the technical transformation of the industrial textile production line in the existing factory area, with a total investment of 32 million yuan and a construction period of 2 years. 3) R & D center construction project. The project aims to improve the quality of the company's R & D center, with a total investment of 21 million yuan and a construction period of 2 years.
Profit forecast and investment rating. We predict that the return net profit of the company from 2021 to 2023 is 172 million yuan, 221 million yuan and 285 million yuan, and the EPS is 1.72,2.21,2.85 yuan. With reference to companies in the same industry, we think that the reasonable valuation is 22-28 times PE in 2021, with a value range of 37.84-48.16 yuan, which is better than that of the big city for the first time.
Risk hint. The new capacity is less than the expected risk, and the downstream demand is less than the expected risk.