\u3000\u3 China Vanke Co.Ltd(000002) 876 Shenzhen Sunnypol Optoelectronics Co.Ltd(002876) )
China’s leading polarizer has steadily expanded its production in 21 years and enjoyed a business cycle Shenzhen Sunnypol Optoelectronics Co.Ltd(002876) is a leading enterprise in China’s polarizer industry. The company’s main products include TFT series and black-and-white series polarizers. Its main customers include China’s panel giants BOE and Huaxing optoelectronics. In 2021, with the full release of the production capacity of Hefei production line and the formal production of Longgang new production line, the revenue scale of the company increased rapidly. The revenue from 2018 to 2021 was RMB 883 million, RMB 1451 million, RMB 1905 million and RMB 2304 million respectively, and the CAGR was 37.7%. In 2021, the strong demand in the panel market led to the increase of product prices, and the old production lines in Hefei, Guangming and Putian were in a saturated state, reducing the unit cost, and the company’s profitability in 21 years was improved: the company’s gross profit margin increased from 17.36% in 20 years to 24.99% in 21 years, and the net profit margin increased from 6.23% in 20 years to 15.35% in 21 years. The construction of new production line is combined with the continuous optimization of product structure to open up long-term growth space for the company.
The localization of panel supporting industry is gradually becoming a trend, and the domestic substitution of polarizer is imperative. Since the 21st century, the panel industry has experienced many years of industrial transfer. After 2017, China began to dominate the panel market. At present, China’s panel production capacity accounts for more than 60%. With the transfer of panel industry, the market demand for polarizers in China is expanding. According to OFweek’s data, the global market scale of polarizers in 2020 was about US $13.21 billion, of which the proportion of Chinese market continued to increase. From 2015 to 2020, the proportion of the Chinese market increased from 21.64% to 40.15%. However, the supply of polarizers in China is still very limited. Polarizer is an important raw material in panel industry. Its manufacturing process is complex. The core PVA layer treatment technology has been monopolized by Japan and South Korea for a long time. According to IHS data, the market share of Chinese mainland enterprises in 2020 was only 10%, but the growth of China’s panel demand made the demand for polarizing film localization improved. Meanwhile, the epidemic also accelerated the withdrawal of Korean factories. In 2020, LG chemical sold some of its capacity to Ningbo Shanshan Co.Ltd(600884) .
Technical strength ensures the leading position, steadily expand production and accelerate domestic substitution. After years of technological research and development, the company has fully mastered the key technologies such as PVA film dyeing, extension and compounding, successfully broke the technological monopoly of Japan and South Korea, and became one of the main polarizer suppliers in China. The company has three major production bases in Shenzhen, Hefei and Putian. At present, it mainly has six production lines. Among them, the new production line in Longgang, Shenzhen was put into operation in 2021. It is estimated that the total production capacity of the company will be about 32 million square meters / year after the climbing is completed by the end of 2022. In the long run, the localization of polarizers is an inevitable trend, and abundant production capacity is the premise of domestic substitution: Putian plans a 1490mm vehicle polarizer line 7 (production capacity of 10 million square meters / year); Hefei phase II plans a 1720mm production line (the production capacity is planned to be 30 million square meters / year) mainly for high gross profit and large-size TV products. The two new production lines in the future are expected to improve the company’s product structure and enhance the profitability of products. By the end of 2021, the company’s annual production capacity is about 23.2 million square meters. With the completion of Longgang line 6 and the continuous production of Putian line 7 and Hefei phase II TV production line in the future, we expect the company’s production capacity to reach about 33.2 and 40 million square meters in 22 and 23 years; It is estimated that the total production capacity of the company will reach more than 70 million square meters by the end of 2024.
Investment suggestion: the company is the leader of polarizer in China, and the localization and substitution of polarizer is imperative. We estimate that the net profit attributable to the parent company in Shenzhen Sunnypol Optoelectronics Co.Ltd(002876) 22 / 23 / 24 is 400 / 603 / 796 million yuan respectively, and the current share price corresponds to 13X / 9x / 6x PE in 22 / 23 / 24. In terms of valuation, compared with comparable companies, considering the continuous expansion of the company’s production capacity and the optimization of product structure, 16 times PE will be given in 2022, EPS will be 2.30 yuan / share in 2022, and the corresponding target price will be 36.8 yuan. For the first coverage, give a “recommended” rating.
Risk tip: the risk of untimely technical iteration, epidemic risk and price rise of upstream raw materials.
