Shenzhen Cotran New Material Co.Ltd(300731) (300731)
Polymer materials have high technical barriers, high gross profit, and rich resources of key customers in communication and power industries. The company’s traditional business is mainly distributed in the field of communication and power. Its main products are high-performance special rubber adhesive tape and its supporting PVC insulating tape and cold shrinkable sleeve. In the field of power, the company’s insulating waterproof tape and other products are widely used in customers such as the State Grid and China Southern Power Grid. In the first half of 2021, the operating revenue of the power industry was 60.87 million yuan, a year-on-year increase of 42%. In the field of communication, the company has established cooperative relations with major communication equipment manufacturers at home and abroad such as Huawei, ZTE, Ericsson and Nokia, and has directly or indirectly cooperated with the three major operators and fi MO.TEC. S. P.a. and other foreign operators have established business cooperation relations. In the first half of 2021, the gross profit margin of the company’s waterproof sealing tape was 51.6%, and the gross profit margin of waterproof sealing sleeve was 66.8%. The technical barrier of polymer materials was high. Under the background of the slowdown of 5g base station construction in the first half of 2021, the gross profit margin of the company’s products remained high.
The capacity of liquid cooling plate and energy storage liquid cooling plate of ruitaike power battery has expanded on a large scale, and has entered the new energy heat management market through the certification of core key customers. According to the company’s announcement, the holding subsidiary ruitaike has become a supplier of Contemporary Amperex Technology Co.Limited(300750) new energy inflatable liquid cooling plate. In order to cope with the expansion of the demand for new energy and energy storage liquid cooling plate, ruitaike has added two liquid cooling plate production lines, One brazed liquid cooling plate for power battery (with an estimated capacity of 800000 sets / year) and one blown liquid cooling plate for energy storage (the estimated production capacity is 1.5 million sets / year). According to the investor exchange record form announced by the company, the inflatable liquid cooling plate of the company will be delivered in small quantities from 2020. In 2021, the new production line has successfully carried out third-party certification and customer certification. The samples related to energy storage and liquid cooling plate of commercial vehicles can quickly enter the stage of batch delivery. We believe that liquid cooling plate is the core of thermal management system Core components have strict requirements for heat dissipation power, high reliability, temperature control accuracy and plate weight. They have passed the certification of core key customers to provide solid endorsement for their technical ability. In the future, the company is expected to further develop the customer group in the field of new energy, and the market share of liquid cooling plate is expected to continue to expand.
Looking forward to the layout of silicon carbide substrate, the second largest shareholder xingorange capital enables the coordination of semiconductor industry. According to the official website of Xingcheng capital, Xingcheng capital, the second largest shareholder of the company, focuses on semiconductor industry investment. Since its establishment, Xingcheng capital has invested in more than 40 semiconductor enterprises such as Advanced Micro-Fabrication Equipment Inc.China(688012) , Verisilicon Microelectronics (Shanghai) Co.Ltd(688521) , Shanghai Weilun electronics and Kelun electronics, with a total investment of nearly 10 billion yuan. It has made key investments in wafer manufacturing, semiconductor equipment, chip design, semiconductor materials, packaging testing and other fields. The company invested in Anhui microchip Changjiang semiconductor materials Co., Ltd. to start the layout of semiconductor silicon carbide materials. According to the company’s official website, in November 2021, the construction project of microchip Changjiang annual output of 150000 silicon carbide wafers was announced to be completed. Silicon carbide has the characteristics of high temperature resistance, high pressure resistance and low loss. It is the core raw material of the third generation semiconductor. According to yole data, 33% of the downstream application scenarios of silicon carbide are applied to new energy vehicles, which will significantly benefit from the rapid improvement of the penetration rate of new energy vehicles.
Investment suggestion: the company has a deep moat of polymer materials business in communication and power industries, and is expected to maintain a high gross profit margin; The liquid cooling board business has passed the certification of core key customers, the capacity expansion is smooth, and the performance is expected to be fully released in 2022; The company’s forward-looking layout of silicon carbide substrate is expected to benefit from the accelerated penetration of new energy vehicles and the improvement of the localization rate of semiconductor materials. We expect the company’s operating revenue to be RMB 616, 1.24 and 1.66 billion and net profit to be RMB 34, 111 and 138 million from 2021 to 2023. Considering the completion of the company’s new liquid cooling plate production line, strong downstream demand and strong growth momentum, we give the company 45 times PE in 2022, corresponding to the target market value of RMB 5 billion and the target price of RMB 39.6. For the first time, it is given a “Buy-A” investment rating.
Risk tip: the progress of customer certification of brazed liquid cooling plate is less than expected, the purchase price of liquid cooling plate is less than expected, the downstream demand of polymer material business is less than expected, and the assumption is less than expected
