The world's leading manufacturer of high-end metal powders for electrical capacitors, with a net profit of 48.9% CAGR from 2017 to 2021. The company is one of the few high-end metal powder companies in the world with large-scale production and sales of nano-scale electrical capacitors, self-developed and mass-produced global leading MLCC (Multi-layerCeramic Capacitors, chip multilayer ceramic capacitors) with 80nm nickel powder has been successfully used in the global MLCC leading Samsung motor products, is the only maker of MLCC nickel powder industry standards in China. In 2017-2021, operating income increased from 323 million yuan to 970 million yuan, CAGR reached 31.6%, net profit increased from 48 million yuan to 238 million yuan, and CAGR reached 48.9%.
Short-term MLCC supply exceeds demand, long-term MLCC high specific capacity trend promotes the growth of demand for high-end nickel powder.
In 2020, the MLCC industry went to the bottom of inventory, the epidemic delayed the pace of resuming work, and the downstream demand increased rapidly, leading to a rise in the volume and price of products. The demand for MLCC in mobile phone, automobile, Internet of things and other fields is expanding. According to the global MLCC market size of about 101.7 billion yuan in CECA,2020 year, it is expected to reach 149 billion yuan by 2025. The high prosperity of MLCC drives the demand growth of metal powder materials upstream. According to our estimation, the global market scale of nickel powder for MLCC will increase from 9.9 billion yuan to 14.5 billion yuan from 2020 to 2025, with CAGR reaching 7.9%. With the continuous enrichment and upgrading of the functions of the end products, especially the gradual expansion of the new energy vehicle gauge-level MLCC, which leads to an increase in the amount of MLCC, which leads to the continuous improvement of the amount and technical level (particle size, morphology) of nano-nickel powder for electrical capacitors.
In 2020, IPO raised funds to help capacity expand significantly, and new capacity will continue to expand in 2022. The company has a production capacity of 1720 tons of nickel powder, 122.4 tons of copper powder and 40 tons of silver powder.
IPO raised new production capacity of 1260 tons of nickel powder, 80 tons of copper powder and 20 tons of silver powder. It is expected that all production will be reached in 2024. After reaching production, the production capacity of raw nickel powder is 2980 tons, an increase of 73.26 percent; that of copper powder is 202.4 tons, an increase of 65.36 percent; and that of silver powder is 60 tons, an increase of 50 percent.
PVD milling process is leading in the world and has a broad space for expansion. The company is improving PVD (PhysicalVapor Deposition, physical Vapor deposition) process to develop the next generation of nano-nickel powder for 50nm and 30nmMLCC. The powder size is the world's leading, and the added value of the products is expected to be further improved in the future. At the same time, many kinds of alloy metal powders have been developed by PVD method, which can be used in electronic shielding materials, metal powder injection molding materials, 3D printing metal powder and other fields, as well as nanometer pure silicon powder used in silicon-carbon negative electrode of lithium battery, which is currently in the pilot stage. In the future, with the expansion of products such as silicon powder and silver-coated copper powder, the room for growth will be further opened.
Investment suggestion: we expect the company's revenue from 2022 to 2024 to be 11.7,14.0 and 1.63 billion yuan respectively, with a net profit of 195 million yuan, 280 million yuan and 380 million yuan respectively, corresponding to the PE level of 55.5,38.6 and 28.7X at the current price. Although the current valuation is slightly higher than the industry average, the company is the world's leading manufacturer of high-end metal powders for electronic applications. In the short term, it is expected to benefit from the triple thrust of the high MLCC boom, the wave of localization and the decline in raw material prices, long-term optimistic about the multi-field expansion of the process, the gradual expansion of new production capacity, and the valuation is expected to be quickly digested, giving a "buy" rating for the first time.
Risk hints: raw material price fluctuation risk, downstream customer concentration risk, exchange rate fluctuation risk, macroeconomic fluctuation risk, market size and gross profit calculation may have errors.