\u3000\u3 Guocheng Mining Co.Ltd(000688) 550 Xi’An Manareco New Materials Co.Ltd(688550) )
Display material leader, relying on the advantages of synthetic technology to expand the field of medicine and new materials
Xi’An Manareco New Materials Co.Ltd(688550) was founded in 1999 and landed on the scientific innovation board in September 2020. It is mainly engaged in the R & D, production and sales of organic materials such as monomer liquid crystal, OLED materials, innovative drug intermediates and electronic chemicals. The downstream application fields include electronic display, pharmaceutical manufacturing, semiconductors, new energy, etc., of which the display field is a leading manufacturer in the world. Since its listing, its revenue and profit scale have shown a rapid growth trend, including an operating revenue of 1.526 billion yuan and a net profit attributable to the parent of 240 million yuan in 2021, with a year-on-year increase of 45.33% and 37.14%, of which the revenue of liquid crystal materials accounts for more than 45%, which is the main revenue contribution point. With its high profitability, the gross profit contribution in the pharmaceutical field has exceeded 30%, which has become an important growth point in recent years.
The localization trend of liquid crystal materials is clear, and the strong OLED promotes the rapid development of the industry
With the rapid development of display technology, TFT-LCD panel and OLED panel are the mainstream products of flat panel display. They will coexist in a certain period of time. At present, the LCD panel capacity is concentrated in Chinese Mainland, and the localization trend is obvious. The localization rate of hybrid LCD is expected to increase to 65% in 2023. OLEDs have strong display performance and are in a period of rapid growth and substitution. In 2021, the global shipment of OLED display panels increased by 28.89% year-on-year, which is much higher than that of LCD display panels; The total demand for upstream OLED materials can reach 110.3 tons, and the compound growth rate from 2018 to 2023 is expected to reach 17.1%. In the pharmaceutical cdmo blue ocean industry, electronics and new energy materials have entered a stage of rapid growth
The pharmaceutical cdmo industry is a blue ocean market, with a market size of US $92 billion in 2021, bound to small molecules
Enterprises with high-quality pharmaceutical customers are expected to stand out with popular products. There is a vast space in the field of new materials. With the improvement of China’s refinement rate, PI, PR, lithium battery materials and other fields have ushered in a high-speed growth stage: PI has excellent comprehensive performance, and the flexible screen promotes the rapid growth of PI film; Photoresist technology to solve overseas neck sticking, the market will exceed 10 billion US dollars; The rapid growth period of new energy vehicles promotes the development of relevant materials, and electrode liquid additives usher in a high-speed growth stage.
The company relies on the existing technology for industrial extension, with obvious business synergy and growth potential
Relying on the advantages of advanced chemical synthesis technology and the coordinated development of multiple industrial chains, and based on the leading position of display materials, the company has strongly entered the field of medicine and new materials, bound with overseas leading enterprises, and developed rapidly with the industry: panel localization and material localization bring customers more opportunities, OLED penetration improvement and the promotion of innovative deuterated blue light materials complement the advantages and disadvantages of LCD; The pharmaceutical industry is deeply bound to international giants, and the reserved products have begun to take shape; Relying on chemical synthesis technology, it has entered the field of new materials and is expected to become the next growth point.
Profit forecast and Valuation: we expect the net profit attributable to the parent company from 2022 to 2024 to be RMB 331 / 378 / 416 million, corresponding to EPS of RMB 4.71/5.39/5.93/share. Using the segment valuation method, we give 20 times PE for display materials and 35 times PE for pharmaceutical and electronic materials. According to the split expectation of EPS in 2022, we give a target price of 120.55 yuan / share in 2022 and a “buy” rating.
Risk warning: the risk that the technical update cannot effectively meet the market demand; Price fluctuation risk of raw materials; Overcapacity risk of electrolyte additive business; Environmental protection and safety production risks
