Investment guide
Huaguang new material is a domestic medium-temperature solder leader, with strong customization ability and outstanding customer advantages, at the same time, the product has a wide application prospect. The company's strong advantages in traditional areas and the expansion of the emerging high-growth track are expected to drive better-than-expected performance. Cover for the first time, giving a "buy" rating.
Main points of investment
Domestic medium temperature hard solder leading enterprises with steady revenue growth
The company is a leading manufacturer of brazing materials, more than 20 years of deep ploughing refrigeration brazing technology research and development and high-quality brazing materials manufacturing, while actively developing other areas of business lines. At present, the company's products cover copper-based solder, silver solder, silver paste and other applications, including refrigeration, power, electrical, electronic components and new energy vehicles. The company's historical revenue grew steadily, with revenue CAGR 18.1% in 2017-2021. Overall revenue in 2021 was 1.21 billion yuan, an increase of 40.8% over the same period last year.
Consolidate the advantageous areas and expand the new high-growth track, there are great prospects for the future.
1) Refrigeration field: the company is the core supplier of Gree, Midea and other household appliance leaders, with a market share of more than 40% in the domestic refrigeration industry chain, and is an absolute leader in the industry. The company has established a deep cooperative relationship with high-quality customers, and is expected to develop new customers at home and abroad on the basis of consolidating old customers in the future, and drive steady revenue growth in the refrigeration field by increasing market share.
2) Electric and electrical field: the company cooperates closely with the leading enterprises in the field, and the product performance has been successfully verified. In the future, the company is expected to rely on mature experience to accumulate and expand customers in the field and further enhance market share. The prosperity of the lower reaches of the power and electrical industry will continue to promote the steady growth of the company's revenue.
3) the field of new energy vehicles: the company has successfully cut into the new energy vehicle track, and its products have been certified by customers, including Hongfa, the leader of relays, and have begun to be used in large quantities in the fields of high voltage DC relays of new energy vehicles, ceramic sealing rings for power batteries, thermal management system parts, etc., in the future, the high scene bearing downstream of new energy vehicles is expected to promote the continuous release of the company's products.
4) in the field of electronics and photovoltaic:
Solder paste: the company's products have passed Shenglu communication, Shuoge electronic verification and batch supply, customer certification of the higher entry threshold to build the company's strong competition barriers. In the context of the acceleration of import substitution of solder paste in the industry, we are optimistic that the new product solder paste will bring bright new growth space for the company's future revenue.
Silver paste: the company's silver paste products are currently used in various types of products in the electronic field, and the business revenue is growing rapidly. The sales revenue of silver paste and other materials in the electronic field increased by 678.08% in 2021. At the same time, the company actively arranges HJT cryogenic silver paste, with excellent R & D and manufacturing capabilities to empower it in the new track. In the future rapid development of HJT battery and the domestic replacement process of HJT low temperature silver paste, the layout of the company's photovoltaic silver paste products is expected to become a new growth point of the company.
Profit forecast and valuation
It is estimated that the overall operating income from 2022 to 2024 will be 12.19 / 16.00 / 2.034 billion yuan respectively, with a corresponding growth rate of 0.68%, 31.28%, 27.07%, 0.01, 0.48, 900 million yuan, respectively, and a corresponding growth rate of-98.23%, 5876.72%, 89.20%, and 0.01, 0.42, 0.79 yuan, respectively, respectively.
Risk hint
The overseas order volume of refrigeration business is lower than expected; the downstream demand of new business such as new energy vehicles and electronics is lower than expected; the development progress of new products such as photovoltaic silver paste is lower than expected; and the risk of raw material price fluctuations.