Main points of investment
The company's main PVD coating materials, strong profitability. PVD coating materials are widely used in optical components, flat panel display, solar cells and so on, and because of the technical difficulty and strong customer stickiness, it is the part of the industry chain with high gross profit margin. The company is a very scarce coating material manufacturer in A-share. The company starts from evaporation materials and gradually develops mainstream sputtering targets to break foreign monopoly. The company has hundreds of kinds of products, mainly downstream for optical components, flat display materials, gross profit margin of nearly 40%, significantly higher than their peers. In the first three quarters of 2017, the company made a net profit of 32.76 million yuan, an increase of 34% over the same period last year.
The company makes great efforts to display the coating material in the layout plane, benefiting from the outbreak of LCD and OLED panel industry. With the outbreak of all kinds of consumer electronic products, the flat panel display industry is developing rapidly, and all kinds of new products such as LCD, OLED, AMOLED emerge in endlessly. Especially with the breakthrough of flexible display screen, it is expected that the flat display industry will continue to break out in the future. The flat surface shows that the profit level of the coating material is high, the localization rate is low, and the competition is relatively small. Through the fund-raising project, the company assumes a 350-ton flat display coating material production line to increase the layout, and the future performance is expected to increase significantly.
The company has an outstanding competitive advantage. The first is the strong technical strength. The chairman of the company himself is the core technical personnel, R & D investment accounts for more than 5% of revenue for a long time, and has 9 core independent R & D technologies. Second, high-quality customer resources and strong stickiness. The company has established cooperative relations with well-known enterprises such as BOE, Qunchuang Optoelectronics, Lance Technology, Bourne Optics, Epson, Crystal Optoelectronics and so on. Because the PVD coating material is highly technical, the certification time can reach 2-3 years, the customer viscosity is high and the barrier to entry is high. Third, relative to peers, the company's coating materials downstream to optical components, flat display-based, strong profitability. And it provides the foundation for the company to attack the city in the future.
Profit forecast and rating: the company's net profit from 2017 to 2019 is expected to be 0.47,0.53 and 84 million yuan respectively, corresponding to EPS 0.81,0.90 and 1.428 yuan respectively, and corresponding PE to 140x, 125x and 80x. According to the valuation level of comparable companies, the average PE from 2017 to 2019 is 146x, 105x and 79x. Considering the advanced technology and good growth prospects of the company's products, the company is given a rating to increase its holdings.
Risk tips: raw material prices fluctuate sharply, downstream demand, project construction and production progress is lower than expected.