Functional composite material provider, used in various fields such as consumer electronics and automotive electronics
The company is mainly engaged in R&D, production and sales of functional coating composites. The products are widely used in consumer electronics manufacturing, new energy vehicle electronics and other fields to achieve functions such as bonding and protection between various functional modules of smart phones, tablets, automotive electronics and other products. Functional composites achieve specific functions that cannot be achieved by a single material by transforming and compounding one or more materials (such as pressure-sensitive adhesives, conductive coatings, etc.) with the substrate through precision coating and printing. Compared with traditional materials, the new materials produced by the company can help customers improve product performance and enhance the user experience. According to different application functions, the company's products can be divided into five categories: functional film materials, electronic grade adhesive materials, thermal management composites, film packaging materials, and polymer polymer materials.
Revenue increased month-on-month in the third quarter, and import substitution led to a steady increase in gross profit
In 2020-2022, the company achieved operating income of 15.39/19.84/1,877 billion yuan, a year-on-year change of +7.45%/+28.89%/-5.39%, and a compound growth rate of 10.4%.
In the third quarter of 2023, the company achieved revenue of 529 million yuan, an increase of 6.82% over the previous year. The company's main business includes electronic grade adhesive materials, functional film materials, film packaging materials, etc., and achieved revenue of 8.44/450/469 million yuan in 2022, respectively, with a year-on-year change of 26.43%/-20.52%/-14.42%.
The company's gross margin increased steadily, and net profit declined in the short term. In 2020-2022, the company's gross margin was 25.1%/27.0%/29.7%, respectively. The main reason is that the company continues to increase R&D investment in functional film materials and electronic grade adhesive materials, and some products have achieved import substitution, driving the company's overall gross profit level to increase. In 2020-2022, the company achieved net profit of 1.82/210/168 million yuan respectively, a year-on-year change of +63.34%/15.59%/-19.97%.
Downstream application scenarios are extensive, and folding screens and VR are expected to contribute incrementally to consumer electronics
The company's products are mainly used in consumer electronics, automotive electronics, photosensitive dry film materials, MLCC materials and other fields. In the consumer electronics sector, folding screens and 5G technology are expected to bring growth to smartphones. According to DIGITIMES forecasts, global shipments of folding screen phones may reach 27.8 million units in 2023, with a year-on-year growth rate of 51.91%.
Furthermore, according to TrendForce Jibang Consulting, although the short-term development of VR and AR devices is limited, it is expected to benefit from a significant increase in terminal applications in 2025, with shipments increasing by nearly 40%.
In the field of automotive electronics, the company's functional coating composites can be widely used in the manufacture of components such as resistors, inductors, capacitors, etc., and the market space is broad. In the field of MLCC materials, the MLCC release film produced by the company is an essential consumable for the casting process, and production technology barriers are high. According to estimates, the global demand for MLCC release films in 2025 is estimated to be 121 billion square meters, with a broad market space.
Profit forecasting
It is predicted that the company's revenue for 2023-2025 will be 18.88, 25.41, and 3.695 billion yuan, EPS 0.31, 0.56, and 1.08 yuan respectively, and the current stock price corresponding to PE is 58, 32, and 17 times, respectively. We are optimistic about the company's platform-based product layout in the field of functional coating composites. Downstream scenarios such as folding screens and VR are expected to drive performance growth, covered for the first time, and given a “buy” investment rating.
Risk warning
Downstream demand recovery falls short of expectations, new product development falls short of expectations, risk of increased industry competition, risk of fluctuations in raw material prices, etc.