The company has built a group of aromatic ketones and is expected to become a leading professional chemical manufacturer in the world. The company is the invisible champion of domestic fine chemical industry. With "Fu Ke reaction" as the core, the company has created an aromatic ketone product group, covering three major businesses: core raw materials of special engineering plastics (DFBP), photoinitiators (MBP, PBZ, ITF) and cosmetic raw materials (HAP). The company has an existing production capacity of 4200 tons of aromatic ketones per year. In 2021, the company will raise funds for the construction of 8000 tons / year aromatic ketones and its supporting projects, and the total production capacity will reach 12200 tons / year after it is put into production. Help the company to achieve the goal of "the world's leading fine chemical enterprise" and "one of the main production bases of Fokker reaction in the world".
DFBP is the core raw material of PEEK, fully benefiting from the rapid growth of PEEK demand. The main downstream uses of DFBP are the production of PEEK and cerebral vasodilator drugs. There are two synthetic routes of PEEK: nucleophilic substitution and electrophilic substitution, generally using nucleophilic substitution route. DFBP is a necessary raw material for the nucleophilic route, and the unit consumption per ton of PEEK is 0.8. PEEK has excellent properties such as high heat resistance and radiation resistance, so it has a wide application prospect in hydrogen energy, wind power and other fields, and the downstream market is facing rapid expansion. On the supply side, Xinhan New Materials plans to expand production of 3400 tons of core raw materials of special engineering plastics, including DFBP, and is scheduled to be put into production in mid-2022. The new capacity is expected to benefit the rapid development of the downstream PEEK industry.
Photoinitiator is the core material of photocuring agent, and the terminal demand is increasing steadily. On the supply side, there are many kinds of photoinitiators, and the varieties of photoinitiators are different in different enterprises. After more than a decade of full competition, the industry M & An integration has been continuously promoted, the number of production enterprises has gradually decreased, and the market share of leading enterprises has been increasing. On the demand side, photoinitiators are mainly used in UV inks and UV coatings. Radiation curing coatings and radiation curing ink alternative technologies are listed as new functional coating manufacturing materials and air pollution prevention technologies by the Bureau of Statistics and the Ministry of Ecology and Environment respectively. From 2003 to 2018, the output of China's UV coating industry grew at an average annual rate of 12%. The output of China's UV ink market also increased from 42300 tons in 2015 to 77300 tons in 2019, with an average annual compound growth rate of 16%.
As a cosmetic additive, the downstream demand of HAP is growing rapidly. HAP has a certain anti-corrosion effect, compared with the traditional anti-corrosion system, it is more safe and efficient. Because of its mild, non-irritating and antioxidant properties, HAP is allowed to be used as a cosmetic additive in major countries and regions all over the world. HAP is one of the main preservatives in domestic children's cosmetics, and it is also added in many mainstream cosmetics in the United States. With the upgrading of residents' consumption and the awakening of consumption consciousness, the scale of China's cosmetics market is growing rapidly, which is expected to continue to maintain the growth trend and drive the growth of demand for HAP.
The company's products have passed the certification of downstream front-line customers, and the fund-raising project opens the space for future growth. The company's products are complete and original, and the main customers are downstream front-line manufacturers, strong strength. From 2018 to 2020, Solvay, Dezhixin and Aijimeng have been firmly in the top three customers in sales, accounting for between 30% and 50% of the company's sales to the three companies. The company plans to raise funds to build 3400 tons of core raw materials of special engineering plastics, 500 tons of photoinitiators, 2950 tons of cosmetic raw materials and 1150 tons of other products (pharmaceutical or pesticide intermediates). Fund-raising projects are expected to help the company to further seize market share and open up new space for enterprise development.
Profit forecast, valuation and investment rating: we predict that the company's parent net profit from 2022 to 2024 will be 97 million yuan, 148 million yuan and 164 million yuan respectively, and the EPS will be 1.22,1.87 yuan and 2.06 yuan per share respectively. We select Zhongxin Fluorine, Xinhe Cheng, Kaisheng Xincai and Tiannai Technology as comparable companies. The average PE of comparable companies in 2022,2023 and 2024 is 33.00,21.50 and 17.43 times (corresponding to the closing price on May 12, 2022), while the current share price corresponding to the company's PE is 24.26,15.89 and 14.37 times in 2022,2023 and 2024, respectively. We believe that the future development of the company is expected to open up, giving a "buy" rating.
Risk hint: the risk that the product price is lower than expected, the risk that the production capacity is not as expected, the risk that the information lags behind or is not updated in a timely manner, environmental protection, R & D technology and other related business risks.