A small giant in the field of functional materials, with remarkable technical advantages and a wide range of layouts. According to the differentiated material needs of customers, the company can form a matrixed functional material system based on functional dimensions such as adhesive properties, physical properties, chemical properties, and weather resistance, and design and synthesize composite functional materials that meet customer needs in multiple functional dimensions at the same time. The company's profitability is strong. In the period from 2019 to 2021, the company achieved rapid growth in both revenue and net profit. In the first half of 2023, with the recovery of downstream demand, the inventory removal phase came to an end. The company's revenue and net profit rebounded significantly in the first half of the year. Revenue increased 19.49% year on year, and net profit increased 18.29% year on year. As the industry picks up further in the second half of the year, the growth rate of revenue and net profit is expected to pick up.
The downstream application field is booming, and the market space for functional materials is vast. Looking at the demand side, the downstream terminal market is picking up, driving up demand for functional materials. The overall consumer electronics market is picking up, demand for new products has emerged, localized substitution is accelerating, and the year-on-year decline in global PC shipments has narrowed, improving significantly from month to month. The size of the NEV market continues to expand, and the market demand for functional materials is exploding. In 2022-2026, China's automotive electronics market will continue to grow at a compound growth rate of 4.7%, and the global market size is expected to reach 148.6 billion US dollars by 2026. Optoelectronic display module materials are widely used, and AMOLED shipments continue to grow. From the supply side, the company occupies a certain share in the functional materials market dominated by international giants.
Decide to increase the capacity and build a 412,000-ton high-efficiency sealant production platform and innovation center. In 2022, the company raised no more than 400 million yuan to build a new high-efficiency sealant project and innovation center project, and built a 412,000-ton high-efficiency sealant production platform focusing on various high-efficiency sealants such as power battery sealants, expanding the company's product structure and helping to expand upstream in the industrial chain, reduce costs while improving industry chain stability.
Profit forecast and investment rating: The company has outstanding technical competitiveness in electronic composite functional materials, and market expansion is progressing steadily. At the same time, the company is actively expanding into new fields and moving closer to the upstream of the industrial chain, which is expected to fully benefit from the increase in downstream automotive electronics manufacturing demand for electronic products. We expect the company's revenue for 2023/2024/2025 to be 5.13/6.41/749 million yuan, up 11.00%/24.92%/16.82% year on year, and net profit of 1.95/2.49/299 million yuan respectively, up 5.10%/27.96%/20.02% year on year. The company's PE in 2023/2024/2025 was 25.96/20.29/16.91 times, respectively, lower than the average valuation of comparable companies. We are optimistic about the company's layout in the fields of electronic composite functional materials, precision process application materials, and optoelectronic display module materials. It covered the first time and gave it a “buy” rating.
Risk warning: risk of changes in the market environment of the consumer electronics industry; risk of price fluctuations of major raw materials; risk of iterative technology renewal.