Core viewpoints
The company is a leading enterprise of reflective materials in China, and its business scope is constantly expanding. The company is the domestic reflective film leader, is the largest reflective material base in Asia. The company started as a reflective material and accelerated to become an one-stop solution provider through fund-raising projects and mergers and acquisitions projects, with an average annual compound growth rate of more than 20% in recent years, the company's product structure continues to improve, and under technological advantages, the company's main products reflective film revenue and gross profit margin continue to rise.
The company's reflective materials are carried out around human and vehicle roads, and stock replacement and import substitution open room for growth. The company's domestic license plate film market share is 30%, and the incremental market has an annual market demand of 750 million yuan. In addition, the stock market has a new license plate promotion market of 4.5 billion yuan; in the road safety market, the company is the only manufacturer of micro-prism reflective film in China. At present, the market share is 10%, as the product technology promotion company is expected to continue to import substitution; in the personal protection market, the company continues to adjust the product structure and expand to high-end areas. Several factors support the performance in the second half of the year: the automobile market continues to pick up, the demand for electric vehicle license plates is enhanced, the new license plate size is large, and high-end customers are expanded.
Aluminum-plastic film technology to achieve a breakthrough, the expansion of production capacity is expected to achieve power lithium battery supply. Aluminum-plastic film is a material for lithium battery packaging, and the downstream market is mainly in the field of 3C consumer electronics and power batteries. The domestic aluminum-plastic film is highly dependent on imports, and the company has taken the lead in achieving a technological breakthrough, with an annual production capacity of 15 million square meters, mainly for consumer electronics lithium batteries. At present, the technology of the company is gradually mature, the core technology is basically digested, and plans to further expand the production capacity to meet the procurement needs of the core customers of power lithium battery.
Acquisition of Warwick new materials cut into LCD optical film. The company's LCD glossy film annual production capacity is 25 million square meters. With the adjustment of customers and products in the first half of the year, the gross profit margin has increased, and the products have entered Hisense system and stable supply. In 2020, the company will expand the scale to reduce production costs, introduce Korean barrier membranes to reduce procurement costs, and improve the rate of quality products by optimizing the process. Under the multi-directional optimization and adjustment business, the quantum dot membrane is expected to turn losses into profits.
PC/PMMA membrane has excellent performance and is expected to become the mainstream backplane material for mobile phones in 5G era. At present, the company's annual production capacity of PC/PMMA membrane products is 10 million square meters, and the main target customers are well-known mobile phone back cover manufacturers such as Tongda Holdings, Intelligent Power, Jinrui New Materials, etc., the new production capacity is expected to be expanded in the second half of the year, and it is expected to contribute to performance growth this year.
Investment advice:
The company is the leader of the domestic optical film industry, the current domestic license plate and road reflective materials usher in the stock market replacement opportunities, the company makes use of domestic unique technical advantages to continue to speed up license plate film market expansion and road micro-prism reflective film import substitution, the future alternative market space is huge. In addition, the company uses long-term accumulated high-precision coating composite technology and micro-nano transfer technology as the core to expand into the fields of aluminum-plastic film, optical film and PC/PMMA composite film, and the new project is expected to continue to contribute to performance increment.
We estimate that the company's revenue from 2020 to 2022 is 15.72 shock 19.19 / 2.278 billion, and its net profit is 2.45 shock 3.50 / 438 million, a year-on-year increase of 24%, 43%, 25%, 0.39, 0.56, 0.70, and the current stock price, corresponding to PE, is as much as 23-16-13, maintaining a "buy" rating.
Risk hint
Chemical raw materials account for a large proportion of the company's product costs, and there is a risk that large fluctuations in raw material prices will affect the company's performance.
The company continues to expand new business, and there are certain operational and management risks in the substantial expansion of the company.
There are many new products in the company's business development, and there is a risk that the R & D and production of new products are not as expected.
The company accounts for a relatively large proportion of overseas revenue, and the risk that the overseas epidemic continues to affect the company's exports for a long time.