Mecca Xincai: From individual champions to high-quality leaders in the industrial coating platform wind turbine blade and container coating industry. Established in 2002, the company is a leading supplier of coatings for wind power blades and containers in China, and is widely deployed in the fields of bridges, steel structures, etc. The company was successfully listed in November 2023 and is the first listed company for wind power blade and container coatings. The company has two production bases in Shanghai and Nantong, with a total annual production capacity of 90,000 tons, and is preparing to build a production base with an annual production capacity of 70,000 tons in Zhuhai. The company has extensive technology accumulation, especially in the field of environmentally friendly water-based industrial coatings. It is deeply tied to large wind power blade manufacturers and leading shipping container manufacturers, and has a high customer concentration.
The company's ROE is in a leading position among industrial paint listing peers, and financial indicators such as profitability and turnover efficiency are superior to peers.
Implement the “1+3+N” strategy, open up new growth points, and move towards an industrial coating platform. “1” represents a focus on environmentally friendly, high-performance, and special functional coatings; “3” refers to the three major business segments of new energy, ocean transportation, and large infrastructure; and “N” is the continuous development of new application fields based on high-end positioning. The company will continue to consolidate its dominant position in wind power blade coatings in the new energy sector and container coatings in the ocean transportation sector, vigorously expand customers in the field of high-end bridge and steel structure coatings, increase promotion efforts in wind power tower coatings, marine coatings, port equipment coatings, energy storage equipment coatings, photovoltaic coatings, etc., and build an industrial coating platform company.
Container paint: Domestic substitution continues, and demand is expected to rebound strongly. The company has accumulated a deep accumulation of container paint, and domestic substitution continues to break through. Since its establishment in 2002, the company has been engaged in R&D and production of container coatings. It has a complete product system and deep industry accumulation. The company's market share in 2020 was about 13%. Considering that the company's container coating business has declined less than the industry in recent years, it is estimated that the current market share has reached more than 20%, and there is still plenty of room for growth.
Container demand is expected to rebound strongly after a ten-year cycle low. Demand for containers has declined sharply in the past two years. Returning to its low level since 2010, we think it is expected to bottom out in 2024, mainly due to: 1) the interest rate cut cycle is expected to begin, global commodity trade is expected to recover, and container production is expected to gradually pick up as the economic inventory cycle rises; 2) the release of huge demand for used containers, the service life span of 13-15 years, used boxes during the previous peak of 2008-2011, and the release of old container replacement demand that is expected to be delayed in the past two years. The global container paint market space is expected to be around 3.4 billion yuan in 2024, an increase of about 90% over the previous year.
Wind power paint: Installed capacity continues to increase steadily, and tower paint has become a growth point. Global wind power installations are expected to continue to increase steadily. The company's blade coatings have been leading the way for a long time, and tower paint is making breakthroughs. Wind power blade coatings are the company's long-term advantage, accounting for more than one-third of the domestic market. The company's current revenue mainly comes from wind turbine blade coatings, but with accumulated customer resources, it has quickly entered the field of wind power tower coatings in 2023, and tower coatings are expected to become a new growth point. Installed capacity is expected to continue to increase steadily. The market space for wind power coatings (blades+tower cylinders) is expected to be about 5.6 billion yuan in 2024, an increase of nearly 15% over the previous year.
Marine coatings: the vast market of 30 billion dollars has great potential
The company is entering the 30 billion yuan marine paint market from wind power and container coatings at the level of 1 billion yuan. The global marine coatings market is highly concentrated, with CR10 accounting for more than 90%, and is completely monopolized by foreign-funded enterprises such as Jotun, AkzoNobel, and Haihong. Certification of marine coatings is difficult, and the company is actively carrying out certification. On the demand side, the global shipbuilding completion volume is relatively stable, and the number of orders received is rising steadily. The new shipbuilding market is expected to continue to grow in the future, and the average age of the global fleet is about 15 years, and demand for overhaul and modification of some fleets will be released. It is estimated that the global marine paint market will exceed 30 billion yuan by 2025.
The company is expected to have net profit of 30/380 million yuan in 2024-25, corresponding to 16/13 times PE, covered for the first time, and given a purchase rating.
Risk warning
1. The container industry is recovering slowly; 2. Wind power installations are lower than expected; 3. Prices of raw materials have risen sharply; 4. Risk of high industry and customer concentration; 5. Risk that profit forecasting assumptions are untrue or fall short of expectations.