Incident: On May 17, 2024, the company announced foreign investment to establish a joint venture. The announcement mentioned that Ruihuatai and Kailing Chemical signed an “Joint Equity Joint Venture Agreement” to jointly fund the establishment of a joint venture company, using the superior resources of each party to jointly carry out special monomer research and development, material application research and technical reserves in the field of cutting-edge materials, including polyimide. Collaborate and integrate R&D targets around the industrial chain, introduce overseas technical resources, support the development of multi-functional, cutting-edge polyimide products, and empower both parties to develop new businesses in the future. The registered capital of the joint venture is RMB 20 million, of which Ruihuatai plans to pledge a capital of RMB 10 million, accounting for 50% of the total registered capital; Kailing Chemical plans to pledge a capital of RMB 10 million, accounting for 50% of the total registered capital.
The thermal control PI film continues to be pressurized, and the electrical PI film and electronic PI film perform well. Since the beginning of 2023, Korea's PIAM has drastically reduced the price of thermal control PI films, increasing competitive pressure. The company's thermal control PI film revenue decreased by 43.09% compared to the same period last year. In line with market conditions, the company increased market development for electrical PI films and electronic PI films (including new energy applications) in due course. Revenue from these two types of products increased by 28.86% and 19.37%, respectively, over the same period last year, achieving structural growth. At the same time, the company increased investment in R&D and continued to promote the development of products such as flexible displays, new energy, integrated circuit packaging, and polyimide materials for aerospace applications.
The company's fund-raising projects are progressing steadily, which is expected to drive the company's future growth. The construction of the company's 1,600-ton fund-raising project plant in Jiaxing has been basically completed, the installation of 4 main production lines and supporting factory systems has been completed, and equipment debugging has been carried out. Of these, 2 production lines were put into use in September 2023, and the other 2 production lines continued to carry out product process debugging. The equipment installation work for the remaining 2 chemical production lines has been completed, and system debugging conditions are in place. Starting in December 2023, the company will verify process stability based on the commissioning results and promote trial production of the entire line. After the fund-raising project is put into operation, it is expected to drive the company's future growth.
Investment advice: The company is a leading domestic PI materials company and is currently constructing the Jiaxing project. Therefore, we expect the company to achieve operating income of 3.89/6.19/731 million yuan and net profit to mother of 0.05/0.43/70 billion yuan in 2024-2026. The corresponding PE is 357.57/42.63/26.24 times, respectively, maintaining the “gain” rating.
Risk warning: New production capacity falls short of expected risk; new product application progress falls short of expected risk; major product competition risk