Recommended logic: 1) the global epidemic led to a substantial increase in demand for disposable gloves, with a compound growth rate of 16% in 2020-2025. 2) production capacity will continue to expand, and nitrile gloves are expected to exceed 250 billion. It is expected to become the leading enterprise of disposable gloves in the world; 3) the glove industry has high barriers, advanced technology and outstanding cost advantages.
The global epidemic has led to a sharp increase in demand for disposable gloves. Since the outbreak of the COVID-19 epidemic, the demand for disposable gloves that can be used for long-term care and emergency care has increased significantly. Global sales of disposable gloves reached 642.1 billion in 2020 and will continue to rise rapidly in 2021. Global sales of disposable gloves are expected to reach 1.2851 trillion in 2025, with a compound growth rate of 15.9% from 2025 to 2025. Compared with latex and PVC gloves, nitrile gloves have many advantages, such as good elasticity, strong stretching, acid and alkali resistance, oil resistance, antistatic, non-allergic and so on. The market size has increased from US $2.6 billion in 2015 to US $8.4 billion in 2020 and is expected to reach US $24.2 billion in 2021. The increase in the proportion of high-end gloves will further promote the growth of the market.
The barrier of disposable glove industry is high, and the company's competitiveness is outstanding. Disposable glove is a typical technology-and capital-intensive industry with high barriers. After long-term development, the company has rich technology and experience, strong financial strength and obvious competitive advantage. Secondly, the company's income mainly comes from overseas, the company's overseas sales channels have been established for many years, the main customers are large dealers, outstanding sales ability, strong channel control ability, disposable gloves mainly face the international market, strong sales strength lays the foundation for the company's performance growth.
With the continuous expansion of production capacity and the continuous optimization of business structure, it is expected to become the leading enterprise of disposable gloves in the world. Since the company went public, the production capacity of disposable gloves has increased from 7.7 billion in 2014 to 45 billion in the first quarter of 2021, including about 24 billion PVC gloves and 21 billion nitrile gloves, making it the world's largest manufacturer of PVC gloves and the world's largest manufacturer of unnatural latex gloves.
At present, the company's capacity expansion is advancing rapidly, and six major disposable gloves production bases of "Shandong-Anhui-Hunan-Jiangxi-Henan-Vietnam" will be formed. it is estimated that the total production capacity of the company will reach more than 70 billion by the end of 2021. the total production capacity is expected to reach 120 billion by the first quarter of 2022, and the total production capacity of disposable gloves will exceed 300 billion by 2025, making it the largest disposable glove manufacturer in the world.
Valuation and investment advice. We selected two companies, Blue Sail Medical and Ogilvy Medical, which are most similar to Yingke Healthcare in the industry. the average PE of the two companies was 8 times in 2020 and 6 times in 2021. The company is an excellent enterprise in China's disposable glove industry, with continuous acceleration in production capacity expansion and continuous strengthening of sales channels. It is expected to become a global leading enterprise in disposable gloves, and its long-term development is worth looking forward to, giving the company a price-to-earnings ratio of 6 times in 2021. The corresponding target price is 167.82 yuan, covered for the first time, and given a "buy" rating.