Core viewpoints
Focus on hot melt bonding materials, the performance is a record high. The company has been ploughing hot melt bonding materials for more than 20 years and has developed into a leading high performance hot melt bonding material enterprise in China. The company's main products are widely used in composite building materials, energy pipelines, high barrier packaging, photovoltaic new energy, flat panel display and other fields. In the first three quarters of 2022, the company's production of functional polyolefin hot melt adhesive particles and hot melt adhesive film was 56700 tons and 90.9092 million square meters respectively, an increase of 18.77% and 132.24% respectively over the same period last year. Driven by downstream demand and capacity expansion, the company's performance has improved significantly since 2021, of which the company's operating income in the first three quarters of 2022 was 1.983 billion yuan, an increase of 69.27% over the same period last year.
The uptrend of the photovoltaic industry has led to a substantial increase in the sales of the company's solar cell packaging film.
From January to November 2022, China's newly installed photovoltaic capacity reached 65.71GW, an increase of 88.66% over the same period last year.
The continuous increase in the newly installed capacity of photovoltaic led to a steady increase in the output of photovoltaic modules. From 2017 to 2021, the output of photovoltaic modules in China increased from 75GW to 182GW, with an average annual compound growth rate of 24.81%.
Photovoltaic packaging film is one of the core materials of photovoltaic modules. The demand for photovoltaic film in China increased from 750 million square meters to 1.82 billion square meters in 2017-2021. With the expansion of the company's solar cell packaging film production capacity, the company's solar cell packaging film sales were 55.8313 million square meters in 2021, an increase of 45.65 percent over the same period last year. The sales volume in the first three quarters of 2022 was 85.493 million square meters, up 53.13 percent over the whole of 2021.
The company is actively expanding the production of solar cell packaging film, seizing the opportunity of the industry. On the one hand, the company accelerates the construction of a new photovoltaic module packaging film production line, which is expected to reach production in March 2023. After the project reaches production, the company's total production capacity of solar cell packaging film can reach about 300 million square meters / year.
On the other hand, the company plans to invest in the expansion project of solar cell packaging film with an annual output of 180 million square meters, including 90 million square meters / year POE film and 90 million square meters / year white EVA film. The iterative upgrade of photovoltaic cell technology puts forward higher requirements for photovoltaic packaging film. POE film has high water resistance and high resistance to PID, so it is more suitable for high efficiency photovoltaic modules. The company will seize the opportunities of the industry and actively expand the production of POE film projects, which is expected to open the space for performance growth in the future.
The company actively promotes the construction of functional polyolefin hot melt adhesive expansion project to open up the space for performance growth. From 2020 to 2021, the capacity utilization rate of functional polyolefin hot melt adhesive is above 90%, and there is a high demand for capacity growth. The company plans to invest in the construction of a functional polyolefin hot melt adhesive expansion project with an annual output of 40,000 tons, which is expected to be completed in December 2023. At the same time, the company implements the technical transformation project of functional polyolefin hot melt adhesive with an annual output of 30,000 tons, realizes the technical transformation and upgrading of related products, and implements import substitution, which is expected to further open up the company's performance growth space.
Investment suggestion
Based on the company's layout in the field of hot melt adhesive film and functional polyolefin hot melt adhesive particles, the company is expected to open up room for performance growth in the future. We expect the company's operating income and net profit in 2022, 2023, and 2023, respectively, to be 2379, 2988, 3.859 million and 350 million, respectively, and the corresponding EPS are 1.69, 2.74 and 3.75 yuan per share, respectively. Based on the closing price of 69.34 on January 17, 2023, the corresponding PE is 41.09, 25.30 and 18.50 times, respectively. Combined with the high prosperity of photovoltaic packaging film industry, we are optimistic about the future development of the company. Cover for the first time and give a "recommended" rating.
Risk hint
Abnormal fluctuations in raw material prices, lower-than-expected downstream demand, iterative risks in product research and development and technology upgrading, etc.
