Main points of investment:
The company's main business is the design, production and sales of high-performance polymer composites and their products based on modified nylon and modified polypropylene. The company's products are mainly used in high-end baby strollers and key structural components of children's car safety seats, core structural components of sports equipment, etc., while polypropylene composites are mainly used in the production of melt blown cloth and non-woven fabrics for face masks. The mechanical indexes such as tensile modulus of the company's modified nylon composites are at the same level as foreign products, and the modification of polypropylene materials can also improve its mechanical properties, heat resistance, aging resistance and so on. From 2018 to 2020, the company's operating income was 2.45,2.69 and 361 million yuan respectively, with a compound growth rate of 21.4%; gross profit margins of 30.02%, 35.35% and 38.65% respectively, and net profit margins of 15.04%, 19.02% and 23.30%, respectively.
Benefiting from the new round of baby boom and consumer upgrading, the company's product demand is expected to expand. China's population of children aged 0-14 has stabilized and rebounded under the drive of policies. According to the National Bureau of Statistics, the proportion of children aged 0-14 has rebounded from 16.40% in 2013 to 16.80% in 2019. At the same time, with the consumption upgrading brought about by the increase in per capita disposable income, we predict that the market scale of the company's downstream products, such as baby carriages and children's car safety seats, will continue to expand. According to the "2020 White Paper on the Development of China's Toy and Baby products Industry" cited in the prospectus, the retail size of the domestic baby carriage market was about 14.72 billion yuan in 2019, with a compound growth rate of 12.40 percent from 2013 to 2019. In addition, the vigorous development of the sports industry and the trend of lightweight cars are also conducive to the expansion of the company's demand for modified plastics.
Investment in R & D strengthens the company's competitive advantage in the industry and is expected to promote import substitution. The company's R & D expenses from 2018 to 2020 were 1140.76, 1435.12 and 17.1518 million yuan respectively, accounting for 4.65%, 5.33% and 4.76% of operating income. By the end of 2020, the company has 29 patents and 1449 formulations, which has a strong technological competitive advantage. The article "Automotive lightweight gives rise to strong demand for modified Plastics" of the China Plastics Association shows that Chinese enterprises in the domestic high-end modified plastics field have only 30% of the market share, and the company has become one of the leading domestic suppliers of high-end modified composite materials. we predict that the company is expected to promote the import substitution process in this field in the future.
Fund-raising projects promote further expansion of capacity. The company has an annual production capacity of 19687.5 tons of high-performance composite materials and 1901.20 tons of precision injection molded parts in 2020. The company's initial public offering raised 270 million yuan, and the investment project will increase the annual production capacity of 25000 tons of high-performance composite materials and 7000 tons of precision injection moldings. the company expects the construction period to be 2 years. The fund-raising project will expand the company's production scale, optimize the product structure, and enhance the company's technological and R & D advantages, so as to enhance the company's comprehensive competitive strength.
Profit forecast and valuation range. We estimate that the company's net profit from 2021 to 2023 will be 92,102,122 million yuan respectively, corresponding to EPS 1.10,1.21,1.45 yuan per share. The company will be given 25-30 times PE in 2021, with a value range of 27.50Muth33.00 yuan, which is better than the market rating for the first time.
Risk hint. The price of raw materials fluctuates; the construction of fund-raising projects is not as expected.