\u3000\u3 Shengda Resources Co.Ltd(000603) 681 Shanghai Yongguan Adhesive Products Corp.Ltd(603681) )
Core conclusion
The global tape market has a broad space. Chinese enterprises welcome high-end tape import substitution nodes, and the company may become the largest dark horse. The global tape market is expected to reach US $74.4 billion in 2025, with an average annual growth rate of 5.2%. At present, the global tape pattern is clearly divided: overseas enterprises occupy the high-end industrial tape market, and Chinese enterprises mainly focus on the medium and low-end civil tape market. With the transfer of terminal automobile, panel and other industries to China, China’s tape industry will usher in the opportunity of import substitution. As the leader of China’s tape industry, compared with other Chinese companies, the company has the advantages of strong R & D strength and fast growth. We believe that the company is expected to take the opportunity of import substitution to become the first global tape leader.
Short term expansion of production of civil adhesive tapes resonates with the logic of volume increase and cost reduction: the company maintains a roe of 15% with high turnover, continues to expand production stock and increase market share in the civil market. It is estimated that the company’s production capacity will reach 4.78/5.34 billion square meters respectively from 2022 to 2023. In addition, the company’s layout of upstream BOPP membrane, the cost reduction of upstream BOPP membrane and the reduction of raw material prices are also important drivers of short-term profit restoration. We calculate that the cost of BOPP membrane can be saved by 7001200 yuan / ton after self-production.
With the upgrading of product structure in the medium term, the volume of profits will grow rapidly: the opportunity of import substitution of high-end industrial tape is coming, and the company may complete the evolution in the next 3-5 years with high R & D investment. At present, the company is transforming into automobile harness tape, medical tape and degradable tape.
Long term establishment of its own brand and strengthening of sales channels: the company is currently building an omni-channel marketing promotion platform. We believe that establishing its own brand, strengthening channels with brands and building brand + channel barriers will be the best solution for long-term development.
Investment suggestion: the company is the leader of civil tape and is expected to grow into the leader of industrial tape by taking the opportunity of domestic substitution. It is expected that the company will realize a net profit attributable to the parent company of 209 / 389 / 523 million yuan in 202123. Give the company 18xp / E in 2022, the target price is 36.67 yuan, the first coverage, and give a “buy” rating.
Risk tips: the new production capacity is less than expected, and the sea freight rate continues to be high
