\u3000\u3000 Yangling Metron New Material Co.Ltd(300861) (300861)
The rapidly rising global leader leads the industry in terms of profitability. Founded in 2015, the company is a global leader in the electroplating diamond line industry. In 2020, the global market share reached about 50%, and the scale of operating revenue is more than 5 times that of similar listed companies, with outstanding scale advantages. In 2015, after the diamond line achieved a breakthrough in Chinese technology and replaced complete import dependence, the industry developed rapidly, and the company took advantage of the trend to rise rapidly. From 2016 to 2020, the compound growth rate of sales volume and operating revenue reached 121.94% and 59.13%. The company’s roe level has been maintained at the highest level in the industry. The annualized roe level in the third quarter of 2021 was as high as 20.25%, exceeding the second place in the industry by 5.90 percentage points.
The company grows together with the photovoltaic industry with huge development space. Electrosectord diamond wire is used for cutting photovoltaic silicon wafer, accounting for more than 90%. The photovoltaic industry is the main downstream of diamond wire industry. As a green and renewable new energy, the photovoltaic industry has a huge space for development in the future, driven by the global carbon emission policy and China’s strategic emerging industry policy, and when the power generation cost continues to decline and approaches the traditional power generation cost. As a major producer of photovoltaic silicon wafers, China accounts for 97% of the world’s output, and 94% of China’s top 10 photovoltaic leaders. The company has close cooperation with photovoltaic leading companies and strong customer stickiness. The company will grow together with the global photovoltaic industry.
With the advantages of scale and technology, the production cost is the lowest, forming an invisible moat, increasing the market share and ensuring the common development of the company and the industry. The highest profit level of the company comes from the lowest cost. The advantages of scale bring strong bargaining power for raw material procurement, the lowest procurement price, and the lowest manufacturing cost due to the superposition of technical advantages. Low cost advantage forms the invisible moat of the company. Under its absolute scale advantage, the company will continue to maintain the trend of capacity expansion. New capacity will be released in 2022 and 2023. At the same time, the company will build substrate production lines and set up micro powder R & D companies to further reduce costs and improve quality and dig deep into the moat. The low cost advantage ensures the increasing trend of the company’s market share and the certainty of the synchronous development of the industry.
Profit forecast and investment rating of the company: we expect the net profit attributable to the owners of the parent company from 2021 to 2023 to be 769 million yuan, 1047 million yuan and 1315 million yuan, and EPS to be 192 million yuan, 262 million yuan and 329 million yuan respectively. Considering the company’s low-cost invisible moat, it ensures its common and sustainable growth with the development of photovoltaic industry. “Strongly recommended” rating for the first coverage.
Risk tip: the development speed and rhythm of photovoltaic industry are lower than expected
