\u3000\u3000 Shenzhen Wote Advanced Materials Co.Ltd(002886) (002886)
Investment logic
The company started with modified plastics and built a platform enterprise of special engineering plastics: the company started in the modified plastics industry, with high and end-to-end product sequence, stable profit and continuous optimization of customer structure. In 2017, the company’s LCP (liquid crystal polymer) products were successfully put on the market. With the industrialization experience accumulated by LCP, the company gradually opened up the industrial production process of high-temperature nylon, polysulfone, polyarylether ketone and other special engineering plastics in the form of two-way empowerment with external mature teams. In 21 years and beyond, 20000 tons of LCP, 10000 tons of high-temperature nylon 10000 tons of polysulfone and 2000 tons of poly (aryl ether ketone) products are striding forward to the platform enterprise of special engineering plastics.
Special engineering plastics have entered a critical period of domestic substitution: special engineering plastics represented by LCP, high-temperature nylon, polysulfone and polyarylether ketone have long been in the oligopoly of overseas enterprises. Over the years, Chinese scientific research institutes and enterprises have gradually promoted the above products from the laboratory to industrial production, and the product performance is sufficient to realize import substitution in some fields, And has a strong cost advantage. At the current time point, the safety of the supply chain under the influence of material localization and epidemic situation is expected to accelerate the verification process of domestic high-end materials by downstream enterprises. In the first half of the year, the company’s LCP sales volume was 2300 tons, with a year-on-year increase of 127%, and the net profit was 15.18 million yuan, with a year-on-year increase of 780%. Other products are expected to replicate this process in the future.
The implementation of the equity incentive plan shows the company’s confidence in high growth in the future: on December 7, 2021, the company issued the restricted stock incentive plan. The assessment indicators are based on 21 years, and the compound growth rate of revenue and profit in the next four years will not be less than 50% and 60%, reflecting the management’s confidence in future development. We believe that the revenue of the company’s special engineering plastics sector will account for 39% and 48% in 22 and 23 years, and the gross profit will account for 59% and 69%.
Investment advice
The company is gradually building a special engineering plastic platform represented by LCP, high-temperature nylon, polysulfone, polyarylether ketone and other materials. The next few years will be a key period for the company’s platform business, and its performance is expected to achieve rapid growth. It is estimated that the company’s revenue from 21 to 23 years will be 1.653 billion yuan, 2.392 billion yuan and 3.173 billion yuan, and the net profit attributable to the parent company will be 61 million yuan, 162 million yuan and 286 million yuan. Considering the company’s platform advantages and high growth in the field of high-end materials in the future, we give the company 45 times PE in 2022, with a target price of 32.24 yuan / share. For the first time, give a “buy” rating.
Risk tips
The risk that the company’s special engineering plastics volume is less than expected; The risk of intensified competition in special engineering plastics industry; Overseas enterprises face the risk of price reduction under the wave of localization; Risk of sharp fluctuations in raw material prices.
