Investment summary
On July 7, the company announced that the total amount of funds to be raised by issuing convertible bonds would not exceed 540 million yuan, which would be used for the construction of Luocheng Silicon Crystal New material R & D and Manufacturing Integration Project (Phase I).
A wide range of downstream applications, to create a new performance growth point. After the completion of the project, it can increase the production capacity of about 355000 tons of quartz filler, 70,000 tons of low-iron quartz sand for photovoltaic glass and industrial silicon ore, 60,000 tons of quartz powder for liquid crystal display glass and 39900 tons of quartz powder for electronic and electrical fillers, downstream can be used in artificial quartz board, photovoltaic glass and other fields, the downstream market is broad, which is conducive to ensuring the digestion of the new production capacity and enhance the company's profitability.
Ensure the supply of upstream materials and reduce the price fluctuation of quartz fillers. The amount of quartz filler accounts for about 90% of the raw materials of artificial quartz stone. In 2021, the total amount of quartz filler purchased by the company is 144800 tons. The first phase of Zhongqi (Hubei) new materials construction project has been put into production, and the annual consumption is expected to reach 300000 tons in the future. At the same time, from 2019 to 2021, the average purchasing price of quartz fillers continued to rise, with an annual output of 355000 tons of quartz fillers after the completion of the project, which can effectively ensure the supply of quartz fillers and reduce the impact of quartz filler price fluctuations on the company's business.
Introduce senior professionals and provide technical support. The company has been ploughing the field of artificial quartz stone for more than ten years, paying close attention to the cutting-edge technology of silicon materials, has introduced senior professionals in the industry of new silicon materials, and has rich experience in R & D, production and operation management of advanced silicon materials.
Good economic benefits, improve the profitability of the company. After the completion of the project, the internal rate of return (after tax) is 18.51%, and the investment payback period is 6.23 years (after tax, including the construction period). The economic benefit is good, which helps to improve the profitability of the company.
Investment suggestion
The issuance of convertible bonds to raise funds for the construction of the first phase of the silicon new material project can not only ensure the supply of quartz fillers, reduce the impact of raw material price fluctuations on the company, and the new production capacity can be used in photovoltaic glass, industrial silicon and other fields. create a new profit growth point for the company. We estimate that the company's operating income from 2022 to 2024 will be 1.84 billion yuan, respectively, an increase of 22.3%, 13.7% and 17.5% over the same period last year. The net profit was 1.60max 1.96pm, an increase of 13.6% / 22.3%, 18.7% over the same period last year, and EPS was 1.36max, 1.66max, 1.98 yuan per share, respectively, corresponding to the share price on July 7, with a valuation of 28X/23X/19X, maintaining the "buy" rating.
Risk hint
The risk that the fund-raising project is not progressing smoothly; the market competition aggravates the risk; the real estate market fluctuation risk
