\u3000\u3000 Nantong Haixing Electronics Co.Ltd(603115) (603115)
The company has been deeply engaged in the electrode foil industry for several years, and the performance growth trend is clear
Since its establishment, the company has continuously improved the core technology of electrode foil to effectively meet the demand of downstream aluminum electrolytic capacitor products.
The company’s 16-year operating revenue is 756 million yuan and 20-year operating revenue is 1.219 billion yuan, with a compound annual growth rate of about 12.69%. In 2021, due to the high popularity of downstream industries such as new energy and photovoltaic and the overall increase in the market share of Chinese manufacturers, the revenue of 21q3 reached 1.214 billion yuan, close to the annual revenue of 20 years, with a year-on-year increase of 39.16%. The net profit attributable to the parent company in 21q3 reached 159 million yuan, a year-on-year increase of 74.94%. According to the company’s performance forecast, it is expected that the annual net profit in 21 years will reach 218-222 million yuan
At present, the company’s fund-raising and investment projects are progressing smoothly. In 2020, the production and sales volume of chemical foil has exceeded 24 million square meters. It is expected that the production capacity in 23 years is expected to double compared with 20 years, reaching 50 million square meters.
The downstream demand is strong, and the electrode foil market is expanding
In 2020, the global aluminum electrolytic capacitor market has reached 40.4 billion yuan. Considering only the growth of aluminum electrolytic capacitor market in photovoltaic and automobile fields, it is conservatively expected that the global aluminum electrolytic capacitor market will reach 46.751 billion yuan in 2025, with a compound growth rate of 2.94% from 2020 to 2025, nearly three times higher than that in previous years. It is estimated that the total market share of photovoltaic and new energy vehicles in aluminum electrolytic capacitors will increase from 4.8% and 1.64% in 2020 to 9.76% and 9.69% in 2025. Photovoltaic and new energy vehicles will also become the main growth drivers for the expansion of the electrode foil market.
From 2015 to 2020, the scale of China’s electrode foil market increased from 9.9 billion yuan to 13.3 billion yuan, with a compound growth rate of 6.08%, including 11.76% in 2020. On the one hand, it is driven by the growth of the global aluminum electrolytic capacitor market. On the other hand, the scale of the global electrode foil market is gradually inclined to China, resulting in the growth rate of the scale of China’s electrode foil market is significantly higher than that of the global aluminum electrolytic capacitor market in the same period.
“Environmental protection” and “energy conservation” restrict the supply of the industry, and the relationship between supply and demand promotes the price rise of electrode foil
The production process of electrode foil includes corrosion and formation. The corrosion process mainly uses acid for electrochemical corrosion. The waste acid treatment and wastewater discharge generated in this process need to be subject to professional environmental protection treatment. At the same time, manufacturers save a lot of power in the formation of electrode foil ring. In 2018, 41% of the production cost of electrode foil was power cost.
The price of electrode foil has formed two rising cycles in 2016-2018 and 2020-2021. The reason for the rise in 2016-2018 is that environmental protection policies restrict the overall supply growth of electrode foil industry; From 2020 to 2021, the rise of electricity price and aluminum price increased the cost of electrode foil. At the same time, the increase of demand driven by photovoltaic, automobile and other fields, as well as the impact of “double carbon” and “double control” on supply expansion, ushered in a new round of price rise trend for the electrode foil industry.
Multiple advantages consolidate the leading position, and the expansion of production can help the company benefit quickly
The company has mastered a number of industry-leading technologies such as expansion corrosion tunnel hole growth control technology, corrosion foil consistency technology and chemical depolarization technology. The technical indicators of its own products rank first in China and even at the international advanced level.
The company’s production bases mainly include Jiangsu Nantong base, Sichuan Ya’an base and Ningxia Shizuishan base. Among them, Nantong base is mainly engaged in corrosion production of medium and high pressure products, corrosion production and chemical production of low pressure products; Ya’an base is mainly engaged in the chemical production of medium and high voltage products and a small amount of low-voltage products; Shizuishan base is mainly engaged in the chemical production of medium and high voltage products. The production capacity layout is reasonable and the cost advantage is prominent. Nantong Haixing Electronics Co.Ltd(603115) has accumulated high-quality customer resources, including NCC, Nichicon, South Korea Sanhe, South Korea Sanying, Nantong Jianghai Capacitor Co.Ltd(002484) , Hunan Aihua Group Co.Ltd(603989) , Taiwan Jinshan, etc. At the same time, it has low dependence on a single customer and reasonable customer structure.
Tf949 has successfully entered the automotive electronic supply chain. Nantong Haixing Electronics Co.Ltd(603115) is the only electrode foil manufacturer in China that has passed the certification standard. At the same time, Nantong Haixing Electronics Co.Ltd(603115) undertook major national projects in 2019 and passed the high score acceptance in 2021 to solve the import substitution of electrode foil for automotive electronics.
Investment advice
Nantong Haixing Electronics Co.Ltd(603115) focuses on the electrode foil for aluminum electrolytic capacitor, benefiting from the high popularity of photovoltaic and new energy industries. The relationship between supply and demand promotes the rising trend of electrode foil price. Superimposed on the company’s leading position in the electrode foil industry and the continuous expansion of the company’s production capacity in the future, it is expected that the company’s electrode foil business will grow rapidly in the future.
High voltage electrode foil business: from 2021 to 2023, the operating revenue of high voltage electrode foil was 1.297 billion yuan, 1.646 billion yuan and 2.044 billion yuan respectively.
Low voltage electrode foil business: from 2021 to 2023, the revenue of low voltage electrode foil business was 325 million yuan, 421 million yuan and 522 million yuan.
To sum up, from 2021 to 2023, we predict that the company’s operating revenue will be 1.625 billion yuan, 2.070 billion yuan and 2.570 billion yuan respectively, with a year-on-year increase of 33.38%, 27.35% and 24.13%. From 2021 to 2023, the comprehensive gross profit margin is 27.29%, 30.36% and 30.37% respectively.
Considering the leading position of the company in the electrode foil industry, compared with comparable companies, the company focuses on the electrode foil industry, and the company should enjoy a certain valuation premium. From 2021 to 2023, we expect the company’s operating revenue to be 1.625 billion yuan, 2.070 billion yuan and 2.570 billion yuan respectively. From 2021 to 2023, we expect the net profit attributable to the parent company to be 221 million yuan, 336 million yuan and 419 million yuan; From 2021 to 2023, EPS is predicted to be 0.92 yuan, 1.40 yuan and 1.75 yuan; Corresponding to the closing price of 22.73 yuan on February 17, 2022, PE is 25X, 16x and 13X respectively. “Buy” rating is given for the first time.
Risk tips
The installed capacity of photovoltaic is less than expected; The sales volume of new energy vehicles is lower than expected; The price rise of upstream raw materials increases the cost of the company; Power restriction affects the commencement of the company; Repeated outbreaks affect the supply of raw materials.
