\u3000\u3 Guocheng Mining Co.Ltd(000688) 106 Suzhou Jinhong Gas Co.Ltd(688106) )
China’s private gas leader has strong core competitiveness. The company is a supplier engaged in gas R & D, production and sales. At present, it has become the largest private enterprise covering bulk gas and special gas in China. Its customers cover electronic semiconductor, medical treatment, environmental protection and other industries. There are more than 100 kinds of products. In recent three years, the CAGR of special gas revenue and bulk gas revenue is 18.7% and 19.7%. In the future, with the promotion of vertical and horizontal strategy, the company is expected to develop rapidly.
The company is in the high-quality track of industrial gas. Gas is the blood of industry. The market scale is large and the demand is stable. According to the data of China industry information network, the global industrial gas market scale in 2019 was US $131.8 billion, and the CAGR in recent five years was more than 10%. Due to the high technical barriers, customer stickiness and Matthew effect of the industry, a monopoly pattern dominated by Linde Group, French liquid air and other leaders has been formed overseas.
Accelerate the introduction of products under the domestic substitution of special gases. According to the data of industrial information network, the special gas market accounts for about 1 / 3 of industrial gas, and has the characteristics of high technical barriers, high added value and integration of products and services. With the continuous expansion of China’s wafer foundry, the growth rate is expected to remain above 15% in the future, but the overseas leaders account for 85% of the market share. With the Sino US trade friction and the accelerated localization of the supply chain, the domestic substitution process of special gases accelerates, and the company ushers in an excellent development opportunity.
The strategy of “vertical development and horizontal layout” constructs the competitive advantage of enterprises. The company adheres to the vertical and horizontal development strategy: 1) vertical development, constantly launching special gas categories and expanding downstream customers; 2) Horizontal layout, expand market share through mergers and acquisitions and investment and set up factories, and extend regional advantages from East China to the whole country.
Investment suggestion: it is estimated that the operating revenue of the company from 2022 to 2024 will be RMB 2.319 billion, RMB 3.119 billion and RMB 4.227 billion respectively, and the net profit attributable to the parent company will be RMB 253 million, RMB 403 million and RMB 575 million respectively. The company is a leading enterprise in the special gas industry, with leading technology, excellent customer resources and accelerated domestic substitution in the industry. It is given 55xpe in 2022, corresponding to the target price of 28.6 yuan. It is covered for the first time and given a “buy” rating.
Risk warning: the macroeconomic downturn affects the demand for industrial gas; Semiconductor gas propulsion was less than expected.
