Hangzhou Juheshun New Material Co.Ltd(605166) (605166)
Focusing on the high-end PA6 chip market, the process and product performance are leading in China and realize partial import substitution: at the beginning of its establishment in 2013, the company took the field of high-end nylon chips as the breakthrough and the development direction of substitution for import. After reaching the post production stage, the company quickly established a brand influence in the high-end nylon Market of the industry and realized differentiated competition. The company’s cost advantage in polymerization comes from two aspects: on the one hand, the company adopts flexible production line to realize the establishment of new production line and capacity adjustment at lower cost; on the other hand, it comes from the advantages of process technology, low unit consumption and close to foreign advanced processes. According to the announcement, the company’s production technology and product performance are in the first echelon in China, and about half of its products have achieved the effect of import substitution.
China’s PA6 production continues to grow rapidly, and the application in the field of engineering plastics and film is expected to become the direction of differentiated development in the future: according to China fiber network, China’s Nylon 6 production capacity will be 5.34 million tons and 3.845 million tons in 2020, with a compound growth rate of 13% from 2010 to 2020. Benefiting from the progress of polymerization technology, stable supply of raw material caprolactam and strong demand in downstream application fields, the production and sales of nylon 6 chip products in China continue to grow, the dependence on imports continues to decrease, and the trend of replacing imports is obvious, but the proportion of high-end products is still low. According to the announcement, China’s Nylon 6 chips occupy a dominant position in the application field of nylon fiber, while the field of engineering plastics and film accounts for only 30%, which is far lower than the level of 50% in developed countries. In the future, it is expected to bring broader space for PA6 application in the fields of automobile, electronics, wind power and so on.
The new production capacity is actively prepared for the construction of medium and high-end layout, and the future development can be expected: according to the announcement, by the first half of 2021, the company’s PA6 chip production capacity has reached more than 300000 tons, and the third line of the raised investment project is 40000 tons, which is expected to be put into operation in 2021; The production capacity of 180000 tons of convertible bond raised investment project is under preparation, and the market share is expected to continue to increase in the next three years. In terms of future development, on the one hand, the company cooperates with upstream raw material caprolactam suppliers to build polymerization production lines at the origin of raw materials, realize joint integration, control the incoming cost of raw materials and give full play to the cost advantage of polymerization; On the other hand, actively promote high-end products and realize high-end layout in the fields of modified nylon and special nylon.
Investment suggestion: it is estimated that the net profit of the company from 2021 to 2023 will be RMB 260 million, RMB 350 million and RMB 500 million respectively, corresponding to 18, 14 and 9 times of PE, and the buy – a rating will be given for the first time.
Risk tip: price fluctuation of raw materials, production capacity construction progress less than expected, etc.
