\u3000\u3000 Hangzhou First Applied Material Co.Ltd(603806) (603806)
Photovoltaic adhesive film: film materials are the forerunner of domestic substitution, with a stable global leading position and a market share of 50-60%. In 2003, through independent research and development, the company officially entered the field of photovoltaic adhesive film, gradually replacing the market share of overseas manufacturers such as Shengbang, Mitsui chemical, Bridgestone and etimex, and grew into a global leader in photovoltaic adhesive film. In 2020, 865 million square meters were shipped, accounting for 55-60% of the global market. From the perspective of current planned production capacity, based on the calculation of 300gw of newly installed photovoltaic capacity in the next 2-3 years, the company can still maintain a listing share of 50%, and its leading position is stable.
Excellent management ability and outstanding competitive advantage. In terms of production cost, the combined effect of scale advantage + equipment self-development + process control brings cost leadership. 1. Scale advantage is reflected in: large-scale raw material procurement can be compressed, simplify channels, improve bargaining power, and bring lower raw material procurement cost; 2. Equipment self research can ensure the continuous and rapid iteration ability of products, and is convenient to optimize the operation parameters of the production line; 3. The excellent process control is reflected in the company’s higher production efficiency and yield. The joint action of the three makes the company’s gross profit margin always lead the industry’s second best level 5pcts, and also maintain an obvious leading advantage in net profit margin. In terms of asset quality, the film industry has low requirements for the initial investment cost of the production line and high requirements for the scale of subsequent working capital. At present, the company has excellent asset structure, the asset liability ratio is only 11%, and the cash in hand is 2.275 billion yuan, which is much higher than other competitors in the industry. It can support the company to respond quickly to the changes of market competition pattern and stabilize its leading position. In terms of expansion strategy, the company dynamically expands production capacity following the downstream photovoltaic installation demand, stabilizes the market share, ensures that the production capacity utilization rate is always maintained at a high level, and optimizes the production cost.
Electronic film materials: actively promote the localization of photosensitive dry film and other materials, and continuously optimize the product structure, which is expected to create a new growth pole of the company. In 2015, the company cut into the field of electronic film materials and began to layout the localization of photosensitive dry films and other products. In 2017, the company began to realize batch shipment, with a scale of 1.59 million square meters. In recent years, the shipment volume has increased exponentially, reaching 45.47 million square meters in 2021h1. The annual shipment in 2021 is expected to be about 100 million square meters, a year-on-year increase of more than double, corresponding to a global market share of about 8%. At the same time of the high increase in shipments, the company has accelerated the construction of production capacity and the development of downstream customers. At present, 420 million flat photosensitive dry film production capacity is newly arranged in Jiangmen, Guangdong, to support PCB manufacturers in the Pearl River Delta. After the completion of production expansion, it is expected to achieve 636 million flat production capacity; In terms of customer expansion, it has entered the supply system of large Chinese PCB manufacturers such as Shennan Circuits Co.Ltd(002916) , Shenlian technology, Shenzhen Kinwong Electronic Co.Ltd(603228) , Aoshikang Technology Co.Ltd(002913) . With the release of new capacity, it is expected to accelerate the introduction. In terms of product structure, the company has launched LDI dry film with high value, breaking the monopoly of overseas manufacturers, which is expected to accelerate the expansion of high-end product line, realize the rapid improvement of the value of photosensitive dry film business, and create a new growth pole of the company.
Performance forecast: the company is expected to realize a net profit attributable to the parent company of RMB 1.910/26.18/3.364 billion from 2021 to 23, corresponding to pe5.2 billion 6 / 38.4 / 29.9x, first coverage, and “overweight” rating.
Risk warning: global demand is less than expected; The price reduction of adhesive film exceeded expectations; New business expansion was less than expected.
