\u3000\u3 Guocheng Mining Co.Ltd(000688) 598 Kbc Corporation Ltd(688598) )
Investment logic
Carbon matrix composite is the leader, and the market share of thermal field system products is leading Kbc Corporation Ltd(688598) is mainly engaged in the R & D, production and sales of advanced carbon matrix composite products, focusing on carbon / carbon composites at this stage. Relying on its technical advantages, the company occupies 30-40% of the market share in the heat field system of single crystal drawing furnace, and achieved a revenue of 1.338 billion yuan (+ 213.72%) and a net profit attributable to the parent company of 501 million yuan (+ 197.25%) in 2021.
Carbon / carbon heat field business: technological advantages open the profit gap, capacity expansion and consolidate the leading position. Thermal field system is a key consumable for preparing monocrystalline silicon. In recent years, the permeability of carbon matrix composites in the crucible field has exceeded 95%. The large-scale silicon wafer will promote the permeability of other thermal field components to continue to improve; The rapid development of photovoltaic drives the high demand for silicon wafers. Considering the demand for new addition / replacement / transformation of thermal field, we expect the demand for carbon / carbon thermal field to grow rapidly from 2022 to 2024, with a compound growth rate of 31.3%. Relying on its technical advantages, the company opened the profit gap and maintained a high gross profit margin of 57.3% in 2021 against the background of nearly 10% decline in product prices. With the promotion of large-size silicon wafers and n-type silicon wafers, the company’s technical advantages are expected to continue to expand. In order to consolidate its leading position, the company issued 600 million yuan of convertible bonds and 1.8 billion yuan of private placement in July 2021 and April 2022 respectively for capacity expansion. It is expected that the capacity of the thermal field will reach 2600 / 3450 tons by the end of 20222023, covering nearly half of the industry demand; In addition, the company’s orders on hand can cover 60.8% of the production capacity by the end of 2021, and the long-term cooperation agreement to be executed exceeds 3100 tons, fully ensuring the digestion of new production capacity.
The application field of carbon based materials continues to expand, and the new material platform can be expected in the future. In April 2022, the company issued an additional 800 million yuan to build Jinbo Research Institute, actively layout semiconductor, carbon / ceramic composite brake materials, hydrogen fuel cells and other fields, and build a new material platform. We expect that the company’s hydrogen fuel cell products are expected to increase gradually in 2023, and carbon / ceramic composite brake materials and third-generation semiconductor products are expected to increase gradually after passing the verification from 2023 to 2024, continuously contributing to the profit growth point.
Investment advice
We expect the net profit attributable to the parent company from 2022 to 2024 to be RMB 668 / 887 / 1137 million, corresponding to EPS of RMB 8.32/11.06/14.17/share, and the current share price corresponding to PE of 27 / 20 / 16 times. The company’s self-developed core technology opened the profit gap, consolidated its leading position with capacity expansion, and laid out a new material platform to highlight high growth. Referring to the valuation of comparable companies, the company was given a PE valuation of 33 times in 2022, corresponding to the target price of 275 yuan / share, and a “buy” rating for the first time.
Risk
Technology upgrade iteration risk; Price fluctuation risk of raw materials; Risk of decline in product price and gross profit margin; Technology research and development and market development are not as expected; Risk of lifting the ban on restricted shares.
