Suzhou Jinhong Gas Co.Ltd(688106) (688106)
As the leader of China’s special gas, the company has strong core competitiveness and gives a “buy” rating for the first time
The company is a leader in China’s special gases. Its products include special gases, bulk gases and natural gas. With leading technology and excellent customer resources, the company raises funds to strengthen production capacity and R & D. at the same time, Chinese policies actively support the development of the industry, the prosperity of downstream industries is high, the domestic substitution of special gases is the general trend, and the company has great growth potential. We expect that from 2021 to 2023, the company can realize the net profit attributable to the parent company of 209 / 349 / 502 million yuan and eps0.1 million yuan respectively 43 / 0.72/1.04 yuan, and the current share price corresponds to pe62 9 / 37.6 / 26.2x, with “buy” rating for the first time.
There is a large space for electronic special gas, and there is an urgent demand for domestic substitution
Industrial gases can be divided into bulk gases and special gases, and the demand for special gases in the semiconductor field is the largest. According to the data of China industrial information network, the global industrial gas market will reach 131.8 billion US dollars in 2019 and 163.2 billion yuan in China in 2020. According to semi data, electronic gas accounted for 13% of the semiconductor material market in 2019, and the scale of global electronic gas for wafer manufacturing reached US $4.37 billion in 2020; According to Zhiyan consulting data, the scale of China’s electronic special gas market will be 17.36 billion yuan in 2020, and it is expected to reach 23 billion yuan in 2024 according to the prediction of forward looking Industry Research Institute. Special gases have high technical, customer certification and capital barriers, resulting in the monopoly of Japanese and American enterprises, with Cr4 reaching 91%. Chinese enterprises are relatively backward in technology and low domestic self-sufficiency rate. At present, foreign giants, Chinese professional gas suppliers and air separation equipment manufacturers are competing in the Chinese market. Domestic enterprises focus on the retail gas market and small and medium-sized on-site gas production market. The state has active policy support for special gases. At the same time, due to the advantages of transportation cost, product price and technology catch-up, the localization of special gases is the general trend.
The company’s core competitiveness is strong, and the raised investment projects will help the future growth
The company attaches importance to R & D and maintains high-intensity R & D investment, so as to maintain the foresight and leadership of the company’s technology R & D and the competitive advantage of core technology. At the same time, the company has a large number of downstream customers and stable structure, which has obvious advantages. In terms of electronic special gas, the company continues to expand varieties. In terms of bulk gas, the company’s horizontal M & A integration has carried out entrusted operation and maintenance management business, and is expected to move towards TGCM mode in the future. At the same time, the company raised funds to develop R & D and production capacity, with great growth potential in the future.
Risk warning: market competition intensifies, downstream demand is less than expected risk, and product R & D is less than expected risk.
