\u3000\u30 Fawer Automotive Parts Limited Company(000030) 22 Levima Advanced Materials Corporation(003022) )
Investment logic
Rich product types, capital increase and M & A effectively expand the industrial chain. The company focuses on the high value-added olefin deep processing industry chain, and its products focus on the direction of new materials. The performance express disclosed that the expected profit in 2021 is 1.08-1.14 billion yuan, with a year-on-year increase of 69-78%. In recent years, the company has continued to promote the upstream and downstream layout of the industry, successively acquiring Jiangsu Chaoli, a downstream polycarboxylic acid water reducer company, Xinneng Phoenix (now Lianhong chemical), an upstream raw material methanol company, and CAS biology, a biodegradable material company, so as to continuously improve the operation stability and profitability.
EVA resin: the high prosperity of photovoltaic leads to the tension of phased supply and demand, and the technical advantage + integrated layout enhances the certainty of profit. EVA resin is widely used downstream, and the high photovoltaic boom has driven the rapid increase in the proportion of photovoltaic material consumption. At present, EVA adhesive film with EVA resin as the main raw material still occupies a large market share. We predict that the demand for photovoltaic EVA resin will reach 1.805 million tons in 2025, an increase of 209% compared with 2020, and carg5 will be 25.3%; The production cycle of EVA resin is expected to continue to increase by 20000 tons in 2020, but the supply and demand of EVA resin is still uncertain. The company focuses on high-end products such as EVA photovoltaic materials and cable materials, with leading technology, ensuring cost advantage, integrated layout, improving business stability, technological transformation projects promoting capacity improvement and product structure optimization, and high profit certainty of EVA resin business.
The layout of new material platform shows high growth. Relying on the high value-added olefin deep processing industrial chain, the company has arranged a number of new material fields, which is expected to continue to create profit growth points. 1) In the field of biodegradable materials: the company has started the first phase of 30000 T / a PLA whole industry chain project and the construction of 50000 T / a PPC industrial production line, and arranged a variety of degradable plastic products; 2) In the field of new energy photovoltaic materials, increase EVA production capacity through capacity expansion and transformation, and actively layout new production capacity; 3) In the field of new energy lithium battery materials, the layout of electrolyte solvent materials for the 100000 t / a lithium battery material carbonate combined plant project under construction and the layout of wet diaphragm raw materials for the 20000 t / a ultra-high molecular weight polyethylene project are expected to contribute a gross profit of 647 / 58 million yuan in 2023.
Investment advice and valuation
We expect the net profit attributable to the parent company from 2021 to 2023 to be RMB 1.107/13.43/1.66 billion, corresponding to EPS of RMB 0.83, 1.01 and 1.24, and the current share price corresponding to PE of 33, 27 and 22 times. The company’s EVA resin technology and cost advantages are significant, and the layout of the new material platform shows high growth. Referring to the valuation of comparable companies, the company is given a valuation of 32 times in 2022, corresponding to the target price of 32.18 yuan. It is covered for the first time and given a “buy” rating.
Risk
Raw material price fluctuation risk, EVA price lower than expected risk, plastic product policy change risk, production expansion project construction progress risk, shareholder (employee stock ownership platform) reduction risk.
