Zhongfu Shenying (688295)
Dry jet wet spinning establishes the leading position of high-performance carbon fiber, and actively cooperates to seek technological breakthroughs in large tow carbon fiber. The company is a leading enterprise of high-performance carbon fiber in China. In 2013, it took the lead in breaking through the dry jet wet spinning technology of kiloton carbon fiber precursor, and won the first prize of national science and Technology Progress Award in 2017. It is the only enterprise in the field of carbon fiber in China to win this honor. After years of independent research and development, the company has taken the lead in various process stages such as polymerization, spinning, preoxidation and carbonization, forming “high-capacity polymerization and homogenization stock solution preparation technology”, “key technology of dry jet wet spinning of high-strength / medium modulus carbon fiber precursor”, “PAN fiber rapid homogenization preoxidation and carbonization integration technology” “Dry jet wet spinning thousand ton high strength / hundred ton medium model carbon fiber industrialization production system construction technology” four core technology systems, and obtained 26 invention patents and 41 utility model patents. In addition, the company also actively distributes 48K large tow carbon fiber. Through cooperation with Beijing University of chemical technology, Donghua University and other universities, the company is expected to make a technological breakthrough in the field of large tow. The company has deep technical barriers in the field of high-performance small tow carbon fiber, and actively expands to large tow carbon fiber. Sufficient technical reserves will help the company maintain a leading position in the future industry competition for a long time.
The production capacity and sales volume are at the forefront of the industry, and the raising, investment and expansion of production consolidate the leading position. In 2020, the company’s carbon fiber production and sales volume were 377721 tons and 362528 tons respectively, accounting for 20.98% and 7.43% of China’s total carbon fiber production / sales volume. The output ranked second in China, and the sales volume led comparable companies. By the end of 2021, the company’s production capacity has reached 9500 tons / year, of which Jiangsu Lianyungang Port Co.Ltd(601008) base has an annual production capacity of 3500 tons and Xining base has an annual production capacity of 6000 tons. The company plans to raise 1.845 billion yuan in this listing, of which 800 million yuan is planned to be used for Xining 10000 ton carbon fiber project. With the 4000 ton capacity of phase II of Xining 10000 ton carbon fiber project put into operation in 2022q1 and the subsequent 14000 ton carbon fiber project in Xining completed and put into operation, the company’s small tow carbon fiber capacity is expected to reach 28700 tons, laying a solid foundation for the company’s long-term performance growth. The production and sales volume of the company ranks in the forefront of the industry, and the overweight production of raised investment will help to further consolidate the leading position in the industry.
Civil carbon fiber products are abundant, focusing on high prosperity areas to help performance growth. The company has systematically mastered the carbon fiber T300, T700, T800, M30, M35 thousand ton technology and M40, T1000 hundred ton technology. The carbon fiber products are rich, covering high-strength type, high-strength medium model, high-strength high model and other categories of carbon fibers. It has basically achieved the benchmarking of the main carbon fiber product models of Longtou Japan Toray in the industry. The products are widely used in aerospace, wind power blades, sports leisure, pressure vessels Carbon / carbon composites, transportation construction and other six fields. From 2018 to 2021h1, facing the increasing demand for downstream wind power and optoelectronics, the company actively adjusted its product categories to better meet the market growth. The revenue proportion of wind power blades and carbon / carbon composites continued to increase, accounting for more than one-third of the total revenue in 2021h1. At the same time, in the face of strong downstream demand, the company also actively develops new products. At present, relevant products have passed the certification of wind power products by GL, which can be applied to hydrogen storage cylinders, wind power pultruded sectors and other fields. The company has rich product structure and wide downstream applications, and timely layout adjustment based on the high prospect of the industry will fully benefit from the improvement of relevant demand and help the company’s future performance growth.
Carbon fiber R & D in the field of overweight aviation and military products business can be expected in the future. At present, the company’s products are still mainly civil carbon fiber. However, with the company’s continuous layout of carbon fiber business in high-end fields such as aerospace, the proportion of military products revenue continues to increase, from 1.14% in 2018 to 7.29% in 2021h1. During the 14th Five Year Plan period, with the rapid loading and stacking of military aircraft, the weight of single machine and the content of carbon fiber composites increased simultaneously, the demand for carbon fiber of military aircraft was strong. At present, the company is increasing the research and development of carbon fiber applications in the aviation field. In the listing plan, 233 million yuan is also used for aerospace high-performance carbon fiber projects, committed to the research and development of the next generation t1100 carbon fiber, and forming an annual production capacity of 200 tons of medium and high modulus carbon fiber. We believe that the company’s continued increase in carbon fiber R & D investment in the aviation field and actively promote the construction of relevant projects will contribute to the development of the company’s military products market and the company’s military products business can be expected in the future.
Investment suggestion: the company is a leading enterprise among China’s carbon fiber enterprises, with deep technical barriers in the field of high-performance small tow carbon fiber. Relying on the core technology, the company is actively arranging production capacity and expanding downstream applications. Considering the upward prosperity of the carbon fiber industry, the company’s carbon fiber production capacity is expected to meet the future market growth and fully benefit from the improvement of relevant downstream demand. We expect the net profit attributable to the parent company from 2022 to 2024 to be 510 million yuan, 729 million yuan and 990 million yuan respectively, and the corresponding valuations are 65x, 45x and 33x respectively. For the first time, a “Buy-A” rating is given.
Risk tip: the speed of production expansion is lower than expected; Downstream demand is lower than expected; The price of upstream raw materials rose sharply.
