\u3000\u3000 Zhejiang Runyang New Material Technology Co.Ltd(300920) (300920)
IXPE is a leader in the subdivided field, actively expanding production to meet the large downstream PVC flooring market. The company specializes in the research, production and marketing of non-toxic environmental protection polymer foam. The main product is electron irradiated crosslinked polyethylene (IXPE). At present, China’s IXPE production capacity has reached 130 million square meters, ranking first in China. With the completion of the 16 million square meter technical transformation project, the 100 million square meter annual IXPE project in South Taihu Lake and the follow-up project in Vietnam, the company will further expand its production capacity and store energy for the growth of downstream PVC flooring demand. China has become the main production area of PVC plastic flooring with the advantages of production cost and industrial chain. From 2014 to 2021, China’s export scale of PVC plastic flooring increased from US $1.972 billion to US $6.687 billion, with an average annual compound growth rate of 19%. The demand growth in Europe and the United States has driven the continuous and stable growth of China’s export scale of PVC plastic flooring.
The price of raw materials fell, the epidemic restrictions on factories in Vietnam became loose, and the company’s performance is expected to reverse at the bottom. LDPE is the main raw material of IXPE. Since 2020q1, the price of LDPE has soared, once rising to 14000 yuan / ton in 2021q3. After 2021q4, LDPE prices showed a downward trend. With the further decline of raw material prices in the future, we expect the company’s gross profit margin will be gradually repaired; In 2021, the company’s plant in Vietnam was shut down for a short time due to epidemic control, and the production was damaged. With the relaxation of epidemic prevention policy and the subsequent expansion of production capacity, the income generating capacity of the plant in Vietnam will be greatly improved. Under the dual thrust of the decline in raw material prices and the opening of production in foreign production areas, the company’s performance in 2022 is expected to reverse at the bottom.
Ixeva thickens the company’s future revenue, and the new “climbing pad” creates a “second growth curve”. At present, some production lines of the company’s new product ixeva have completed the installation, commissioning and trial production, and the production is about to be put into operation, which can provide a new path for the company to generate income in the future; China’s maternal and infant products market continues to expand. From 2012 to 2019, the market scale of China’s maternal and infant products increased from 1237.6 billion yuan to 2991.9 billion yuan, with an average annual compound growth rate of 13.44%. The company has carried out strategic cooperation with keyoubi and plans to launch high-grade green infant and child activity protective pads with the company’s newly developed high rebound series IXPE products as liner materials, namely “climbing pads”, Capture the market of mother and baby products. This product has consumption attributes. After successful promotion, it is expected to become the “second growth curve” of the company.
Investment advice. It is estimated that the company’s earnings per share from 2021 to 2023 will be 1.1, 2.0 and 2.7 yuan, corresponding to 28, 15 and 11 times of PE respectively. Based on the clear production expansion plan of the company, the forward-looking layout of overseas plants, the vast downstream market space, and the potential of the new climbing pad to become the “second growth curve”, it is covered for the first time and given a “buy” rating.
Risk tip: the company’s capacity expansion speed is lower than expected; The price of upstream raw materials remains high; The growth rate of downstream demand slows down; High customer concentration and risk.
