\u3000\u3 Jointo Energy Investment Co.Ltd.Hebei(000600) 552 Triumph Science & Technology Co.Ltd(600552) )
New material + UTG glass helps to increase performance, and the profit may be further improved. High value-added new materials such as spherical silica powder / nano zirconium / high-purity quartz sand and other products rely on imports. The company has made technological breakthroughs in recent years, and the capacity expansion is also ready. It is expected to gradually increase the company’s performance in 22 years. According to cinnorresearch, the shipment volume of folding mobile phones will grow rapidly in 22 years. As a distributor of China’s UTG whole industry chain, after completing the technology and capacity reserves, it has the first mover advantage in China, and the performance in 23 years is expected to make a significant breakthrough. With the promotion of Kaisheng group’s “3 + 1” strategy, the company’s new materials and display business will continue to develop as a focus.
The new material sector continued to grow in large quantities and became the most certain growth pole. Using the zirconium / silicon / titanium series elements in zircon placer, the new material sector forms three categories of zirconium / silicon / titanium series. Zirconium products include fused zirconia / zirconium silicate / nano zirconium, silicon products include spherical silica powder / high-purity quartz sand, and titanium products include nano barium titanate. In the past 21 years, the profits of traditional and high value-added new materials increased significantly. According to the net profits of Zhongheng and Zhongchuang, they were yoy + 91% / 118% respectively. Among them, the price of traditional electrofusion zirconia / zirconium silicate continued to rise in the second half of 21 years, which is related to the growth of downstream demand and the tight supply of raw materials. It is expected that the volume and price will remain relatively high in 2022. In the field of high added value, we believe that the most anticipated business increment in 22 years comes from spherical silica powder, and its production capacity is expected to be continuously released. In 23 years, nano zirconium is expected to make a considerable contribution to the profit after large-scale production because of its high profit per unit. At the end of 23 years, the production capacity of high-purity quartz sand is expected to be completed, providing an incremental source of profit for 24 years. We expect that the net profit attributable to the parent company of the new material sector in 22 / 23 / 24 will reach 170 / 2.1 / 260 million yuan.
UTG products have obvious advantages, and are expected to take advantage of the east wind of the industry to quickly increase the volume. According to DSCC, the shipment volume of folding screen will increase from 17.5 million in 22 years to 57.4 million in 25 years, CAGR + 62%. The company has three advantages: self supply of the original film, leading production capacity layout, long-term running in with mobile phone manufacturers, taking the lead in completing technical certification, and leading the localization of UTG. With the phase II production line put into operation at the end of 22, the annual production capacity of UTG will increase from 2 million to 17 million, which is expected to break the monopoly of overseas giants, accelerate the domestic substitution of UTG and become an important growth pole of the company’s profits. In addition, UTG is widely used not only in folding mobile phones, but also in folding notebooks / scroll display / screen voice and other flexible display products in the future.
The production capacity of display modules has expanded steadily, which is expected to drive the profit growth of the company. Display business includes display module / ITO conductive film glass / TFT-LCD glass, etc. Among them, the display module of Shenzhen Guoxian, a subsidiary, is an important source of profit for the sector and even the company, with a net profit of 232 million yuan in 21 years. According to the announcement, three display module bases will be put into operation in the next 3-5 years, with a total investment of 1.14 billion, a production capacity of 47.8 million square meters, and a planned contribution of revenue / net profit of 6.44/264 billion respectively.
It is estimated that eps0.5% will be achieved in 22-24 years 39 / 0.52/0.76 yuan, CAGR + 54% in 21-24 years, and its high growth mainly comes from the large volume of high value-added new materials and UTG. With reference to the valuation level of comparable companies, the segment valuation method is adopted to estimate 33 / 32 times of PE in the new material sector / display sector in 2022, corresponding to the target price of 12.30 yuan. It is covered for the first time and given a “buy” rating.
Risk tips
UTG volume and price are lower than expected, indicating that the expansion of module production is lower than expected, customer change risk and government subsidy fluctuation
