\u3000\u3000 Xi’An Manareco New Materials Co.Ltd(688550) (688550)
Key elements of the report:
On the evening of February 23, Xi’An Manareco New Materials Co.Ltd(688550) released the annual performance express of 2021. The company is expected to realize an operating revenue of 1.539 billion yuan in 2021, with a year-on-year increase of 46.67%; The net profit attributable to the parent company was 238 million yuan, a year-on-year increase of 35.91%.
Key investment points:
The main business grew steadily, and the annual performance slightly exceeded expectations: Quarterly, the company is expected to achieve an operating revenue of 406 million yuan in the fourth quarter, a year-on-year increase of 26.09%; The net profit attributable to the parent company was 70 million yuan, a year-on-year increase of 34.62%. The company’s performance in the fourth quarter and the whole year slightly exceeded expectations, and the profit growth was less than the revenue growth, which was mainly affected by factors such as exchange rate loss caused by RMB appreciation and sharp rise in raw material prices.
The demand for LCD panels revived and the penetration of OLED panels accelerated, resulting in a bright growth in the display material sector: the performance of the company’s display material sector increased significantly in 2021. On the one hand, the sales volume of materials before sublimation increased significantly year-on-year due to favorable factors such as the rising penetration of OLED panels and the demand for upstream materials; On the other hand, the demand for related end products in the “residential economy” caused by the epidemic of liquid crystal materials has soared, and the signs of industrial recovery are obvious. Considering that the shipments of small and medium-sized OLED panels are still in a period of rapid growth, and the share of large-sized OLED panels still has great room for growth, the market demand for OLED display materials will continue to expand in the future. The company’s unique blue light deuterated pre sublimation materials can improve the service life of blue light materials, and its demand increases more rapidly; At the same time, the company has also mastered the production technology of green light deuterated materials that can improve the performance of green light materials, and has passed the customer verification, waiting to contribute to the performance. It is expected that the company’s OLED business will still maintain a considerable performance growth in 2022. In terms of liquid crystal materials, with the elimination of the influence of favorable factors such as “home economy”, its demand growth may decline significantly in 2022. However, in the future, with the continuous tilt of the focus of the liquid crystal panel industry to China and the company’s strengthening cooperation with downstream customers in China, the liquid crystal material business is still expected to maintain a steady and small growth.
The pharmaceutical business is concentrated in the second half of the year, with full long-term development potential: at present, the pharmaceutical sector of the company is still mainly focused on the pharmaceutical intermediate business, with the intermediate pa0045 of alentinib for the treatment of lung cancer as the main source of performance growth. In 2021, the performance of the company’s pharmaceutical sector began to be realized intensively in the third quarter, and the performance was in line with expectations. In 2022, the company will have two new intermediate products on the market. In addition, the company has sufficient reserves of pharmaceutical pipelines and rich types of indications. The company has also started the construction of API projects. In the long run, the company’s pharmaceutical sector has a good development prospect and is expected to continue to be the main growth point of the company’s performance in the next few years.
Grasp the industrial development outlet, invest in new energy materials and build a diversified product structure: Based on the small molecule organic synthesis technology that the company has been engaged in fine chemical industry for many years, the company has arranged the production capacity of film-forming additives vinyl carbonate (VC) and vinyl fluorocarbonate (FEC) for lithium battery electrolyte. The company was involved in the technological research and development related to electrolyte additives a few years ago, but it was temporarily shelved due to market demand, investment scale and other factors in the early stage. In the second half of 2020, on the eve of the outbreak of the new energy industry, the company restarted the research and development of relevant technologies and promoted the rapid mass production of pilot technology with its own technical advantages. By January 2022, compared with similar products in the market, the indicators of VC and FEC produced by the company meet the requirements. And because the company has more advantages in the field of small molecule organic synthesis, at the same time, most of the equipment and display materials of VC and FEC are common, and the quality management system and quality inspection system are basically the same, the company’s VC and FEC products have more advantages in quality and cost. Therefore, even if the prices of products put into production by VC and FEC fall, the profit margin of the company’s business will probably not be inferior to that of its peers. Now the company has begun to contact with downstream customers and is expected to be officially put into operation in the second half of 2022. The development of new business will help to promote the diversification of the company’s product structure, improve the industrial layout, and contribute to new performance growth points.
Profit forecast and investment suggestion: according to the company’s performance in 2021 and the subsequent increase / production plan of each sector, we adjusted the company’s profit forecast from 2022 to 2023. It is expected that the company will realize a net profit attributable to the parent company of RMB 318 / 450 million from 2022 to 2023, with a corresponding PE of 19.76/13.95 (corresponding to the closing price of RMB 89.51 on February 23), maintaining the “buy” rating.
Risk factors: it shows that the competition in the material industry intensifies and the profitability of products declines; Exchange rate fluctuation risk; Risk that the capacity under construction / projects under research are not progressing as expected.
