With the rapid development of new materials, the localization rate of many in-process materials is relatively low, shouldering the important mission of breaking through the "neck of the neck" technology. The company started from the business of modified plastics, and is currently mainly engaged in the R & D, production, sales and technical services of modified engineering plastic alloys, modified general plastics and high-performance functional polymer materials. committed to becoming an international well-known brand material supplier and world-class material solution provider. The company always pays attention to the extended layout of high value-added material products and industrial chain, constantly strengthens the platform construction ability of special polymer materials, and pays attention to the platform coordination ability. In terms of LCP materials, focusing on the characteristics of customer material requirements in the downstream communications and electronics industries, the company has carried out R & D and preparation process research on a variety of materials with low and high permittivity, and the products have been able to ensure self-controllable and stable mass production in the customer supply chain. Under the mutual cooperation, the company's PPA project has been completed and put into production and provides customers with materials that meet the needs of customers in automotive electronics and other fields; the company's high-frequency circuit boards use PTFE thin film materials to achieve mass production, achieving effective applications in 5G and flat panel display industries; polysulfone and PAEK production lines have been set up and small batch test materials have been completed. The 100-ton PPS modified production line has also been put into use and has been certified and used by customers in downstream new energy vehicles and other fields.

Acquire Zhejiang Kesai and Shanghai Walka to integrate industrial resources and improve layout efficiency. In 2019, the company acquired a 51% stake in Zhejiang Kesai. The film for Kesai high-frequency equipment has been mass-produced and will form a systematic high-frequency material solution with the company's existing high-frequency circuit board substrate materials and low dielectric loss liquid crystal polymer (LCP) materials to enhance the company's competitiveness in the market of materials for high-frequency and 5G equipment products. In 2022, the company acquired a 51% stake in Shanghai Walka to further improve the resin layout. Shanghai Walka is the only self-owned manufacturing base of Walka in the world in the field of fluororesin materials. through this transaction, the company will achieve efficient distribution of business in the above areas. accelerate the application and promotion of other special polymer materials in the above-mentioned fields. In addition, the company will work with Walka Co., Ltd. to explore global cooperation opportunities in the materials industry, and continue to enhance the company's overall competitiveness and market position.

The fixed increase plan has been approved, and the fund-raising project provides the core driving force for production expansion. The company announced on May 22 that the stock offering prospectus would be issued to specific targets. 773 million yuan of the raised funds would be used for the "annual production of 45000 tons of special polymer materials construction project" of the Chongqing base. After all the projects were completed and reached production, It will increase the production capacity of liquid crystal polymer (LCP) composites by 20,000 tons per year, polyphenylene sulfide (PPS) composites by 20,000 tons per year, and high performance polyamide (PPA) resins and composites by 5000 tons per year, so as to reserve capacity for subsequent business expansion.

Investment suggestion: the company actively distributes the special polymer materials plate and is committed to creating a multi-category material platform with high quality products and customer satisfaction. based on the fact that the company's fixed increase projects will be built one after another and the production capacity reserve is sufficient, superimposed on the profit flexibility brought about by the subsequent localization of raw materials, we estimate that the company's net profit from 2023 to 2025 will be 0.63,1.57,296 million yuan respectively. The corresponding EPS is 0.28,0.69,1.31 yuan per share, and the corresponding PEG is 21-18-16, which fully reflects the high growth. Cover for the first time and give a "recommended" rating.

Risk hints: macroeconomic situation risk, raw material price fluctuation and supply shortage risk, IPO progress less than expected risk, capacity expansion less than expected risk.