High-technology barriers to polymer materials are highly profitable, and major customers in the communications and power industries are rich in resources. The company's traditional business is mainly distributed in the fields of communication and power. Its main products are high-performance special rubber adhesive tape and two major series of products, PVC insulating tape and cold shrinkable tubes used in conjunction with it.
In the power sector, the company's insulating and waterproof tape and other products are widely used by customers such as China Power Grid and China Southern Power Grid. The power industry's revenue in the first half of 2021 was 60.87 million yuan, an increase of 42% over the previous year.
In the field of communications, the company has established cooperative relationships with major domestic and foreign communication equipment manufacturers such as Huawei, ZTE, Ericsson, and Nokia, and has directly or indirectly established business partnerships with the three major domestic operators and foreign operators such as FI.MO.TEC.S.P.A. In the first half of 2021, the gross profit margin of the company's waterproof sealing tape was 51.6%, the gross profit margin of waterproof sealing casings was 66.8%. The technical barriers to polymer materials were high. Against the backdrop of a slowdown in the pace of 5G base station construction in the first half of 2021, the gross margin of the company's products remained high.
The production capacity of Ritec power battery liquid cold plates and energy storage liquid cold plates expanded on a large scale, and entered the new energy thermal management market through certification from core major customers. According to the company announcement, the holding subsidiary Retech has become a new energy inflatable liquid cold plate supplier in the Ningde era. In order to cope with the expansion of demand for new energy and energy storage liquid cold plates, Retech added two new liquid cold plate production lines, a brazed liquid cold plate for power batteries (estimated production capacity of 800,000 sets/year), and an inflatable liquid cold plate for energy storage (estimated production capacity 1.5 million sets/year). According to the company's announcement and investor exchange record sheet, small-batch delivery of the company's inflatable liquid cold plates began in 2020, and the new production line successfully carried out third-party certification and customer certification in 2021. Samples related to energy storage and liquid cold plate related samples for commercial vehicles can quickly enter the stage of batch delivery. We believe that liquid cold plates, as the core component of thermal management systems, have strict requirements for cooling power, high reliability, accurate temperature control, plate weight, etc., and provide solid endorsements for their technical capabilities through certification from core major customers. In the future, the company is expected to further develop the customer base in the new energy sector, and the market share of liquid cold plates is expected to continue to expand.
With a forward-looking layout of silicon carbide substrates, Xing Orange Capital, the second largest shareholder, empowers collaboration in the semiconductor industry. According to the official website of Xing Cheng Capital, Xing Cheng Capital, the second largest shareholder of the company, focuses on investment in the semiconductor industry. Since its establishment, it has invested in more than 40 semiconductor companies such as Sino Micro, VeriSilicon, Shanghai Micro, and Guilun Electronics, with a total investment amount of nearly 10 billion yuan. It has made key investments in wafer manufacturing, semiconductor equipment, chip design, semiconductor materials, package testing, etc. The company invested in Anhui Weixin Changjiang Semiconductor Materials Co., Ltd. to begin the layout of semiconductor silicon carbide materials. According to the company's official website, in November 2021, the construction project for the Microchip Yangtze River project with an annual output of 150,000 silicon carbide wafers was announced. Silicon carbide has the characteristics of high temperature resistance, high pressure resistance, and low loss. It is a core raw material for third-generation semiconductors. According to Yole data, 33% of the downstream application scenarios of silicon carbide are used in new energy vehicles, which will significantly benefit from the rapid increase in the penetration rate of new energy vehicles.
Investment advice: The company's polymer materials business in the communications and power industries has a deep moat, and is expected to