Key points of investment:
The company is mainly engaged in R&D, production and sales of modified plastic products. The company's main products include high-performance modified nylon, high-performance modified polyester, engineered polyolefin, color masterbatches and functional masterbatches, etc., which are widely used in various industries such as power tools, automotive parts, household appliances, electronics, and office furniture products. With excellent product performance and stable product quality, the company has established good and stable cooperative relationships with world-renowned enterprises, and has become a member of the global modified plastics industry chain. The level of technology and process continues to improve, and the business scale continues to grow.
The R&D capacity of the headquarters continues to improve, and production capacity for modified plastics will be added in 2024. As of 2023, the current capacity utilization rate is around 77%. The civil engineering project to raise funds for new construction projects has been inspected in the second half of 2023, and the construction of equipment platforms and installation of project equipment are being promoted as soon as possible. In 2024, we will strive to achieve: (1) complete the R&D center equipment installation project to achieve more complete R&D capacity at the headquarters by the end of the year; (2) complete the installation project of 4 modified plastic production lines to achieve 30,000 tons of additional production capacity and production capacity for more complex process requirements.
Multi-module revenue is expected to grow in 2024, and the number of sales staff is expected to increase. By the end of 2023, the company currently has about 190 employees, including 16 sales teams and 51 R&D teams. It plans to increase sales volume in 2024. With the clarification of the company's strategy and the implementation of the strategy to support the growth of the business scale, the company's demand for sales expertise and basic talents is urgent. The company expects sales revenue from modules such as power tools, household appliances, and automobiles to increase in 2024.
Profit forecast: We expect the company's net profit to be 1.45, 1.83, and 219 million yuan respectively for 2024-2026, corresponding EPS of 1.47, 1.84, and 2.21 yuan/share, respectively. Referring to the valuation of comparable companies in the same industry, PE was given 18-20 times in 2024. The reasonable value range was 26.46-29.40 yuan, and the rating was “superior to the market”.
Risk warning: The progress of new construction projects falls short of expectations; downstream demand falls short of expectations; oil prices fluctuate greatly.