Nanya New Material Technology Co.Ltd(688519) (688519)
Brief comment on the event
According to the announcement on December 17, 2021, in order to meet the working capital demand of Jiangxi South Asia N5 plant after it is put into operation, the company plans to agree Jiangxi South Asia to apply for a bank loan of no more than 250 million yuan from Jiangxi branch of Export Import Bank of China to provide joint and several liability guarantee.
Business analysis
With financial support, we will actively expand production and open a channel for rapid growth. The company is the 12th largest supplier of copper clad laminate in the world and the 3rd largest supplier in the mainland. In 2020, the global market share was only 2%. Compared with the first market share of 15% in the world and 12% in the mainland, the company still has great room for improvement. Based on this, the company has begun to actively layout its production capacity since its listing. The provision of loan guarantee for its subsidiaries this time will help actively develop the new plant in Jiangxi and lay the foundation for entering the rapid development channel in the future.
The ability to cope with the cycle is better, and there is no need to worry too much. Through the resumption, we believe that leading manufacturers are expected to take the lead in getting out of the cycle haze by adjusting the relationship between pricing downstream and bargaining upstream. Further, we estimate from the company’s performance in the first three quarters that the gross profit of Q3 single sheet decreased by 13.8% relative to Q2, but still increased by 4.6% relative to Q1, which shows that the main factor for the decline of the company’s gross profit is that the unit price is too high, and the gross profit factor of single sheet still maintains the state of price increase premium when the demand boom is significantly weaker than Q1, indicating that the company has a good ability to cope with the cycle, If this state can be maintained, the company’s single gross profit is expected to take the lead in stabilizing and recovering in the future CCL industry cycle.
Actively expand production + large volume of high-end products to ensure profit growth. 1) The effective capacity will grow by 39% in the next two years. According to the project progress, we expect that the company’s effective production capacity will reach 38.4 million and 54 million annually in 2022 and 2023, that is, the compound growth rate of the company’s effective production capacity will reach 39% in the next two years, and the release of capacity will help the growth; 2) The operation of Jiangxi plant is rationalized and profits are reaped. Since the beginning of this year, the production lines of Jiangxi plant have gradually run smoothly. At present, all three production lines of N4 plant have been fully produced, and the cost dilution has achieved initial results. In the future, after N5 and subsequent plants are put into operation, the cost will be further diluted, and the profit constraint is expected to be eliminated; 3) High end products are expected to be in large quantities after passing the certification. The company is one of the earlier manufacturers of high-speed copper clad laminates in China. At present, it is the only mainland funded copper clad laminate manufacturer with a full range of high-speed products of various grades certified by Huawei. We believe that the large volume of high-end products will provide guarantee for the long-term growth of the company.
Investment advice
We estimate that the net profit attributable to the parent company from 2021 to 2023 will be 400 million yuan, 550 million yuan and 760 million yuan, with a corresponding PE of 27x \ 20x \ 14x, and continue to give a “buy” rating.
Risk statement
The demand is less than expected; Falling prices lead to lower than expected profits; The ban on restricted shares was lifted.
