\u3000\u3 Guocheng Mining Co.Ltd(000688) 323 Rayitek Hi-Tech Film Company Ltd.Shenzhen(688323) )
The company is a leading enterprise in the field of PI film in China, with steady growth in operating revenue in 2021q1
The company specializes in the R & D, production and sales of high-performance PI films such as thermal control PI films, electronic PI films and electrical PI films. It is one of the few high-performance PI film manufacturers in China who master the whole set of core technologies such as formula, process and equipment. It has become one of the most abundant suppliers of high-performance PI films in the world. On April 28, 2022, the company released the first quarter report of 2022. In 2022q1, the company realized an operating revenue of 807878 million yuan, a year-on-year increase of 0.66%; The net profit attributable to the parent company was 122818 million yuan, a year-on-year decrease of 27.23%; The net profit deducted from non parent company was 117355 million yuan, a year-on-year decrease of 24.87%; The basic earnings per share was 0.07 yuan, a year-on-year decrease of 46.15%. Overall, the company’s operating revenue maintained a steady growth trend in the first quarter, but the profit performance was lower than expected. The reasons were: ① the price of bulk commodities rose under the background of the conflict between Russia and Ukraine, and the price of the company’s main raw materials also increased. In the first quarter, the purchase prices of ODA and PMDA increased by 23.56% and 32.25% respectively; ② In order to consolidate the existing technical advantages, the company continued to increase R & D investment. In the first quarter, the company’s R & D expenditure was 6.243 million yuan, a year-on-year increase of 29.65%. The company’s financial expenses and management expenses decreased by 28.9% and 28.3% respectively compared with Q1 and 2023 in the same period last year, but the control rates of Q1 and 2023 were significantly lower than that of Q1 and 2023, respectively. If the price of raw materials gradually returns to the right track in the next period of time, and the new production line is completed and put into operation, the company’s performance is expected to usher in rapid growth.
Thermal control and electronic PI films are the main driving forces for the company’s performance growth
① from 2018 to 2021, the company’s thermal control PI film business revenue accounted for about 50% of the total revenue, which was the largest source of revenue. Considering that the carbonization graphitization method of PI films has more advantages in preparing highly crystalline and highly oriented graphite films with high thermal conductivity, and the downstream graphite films have a wide range of applications and high quality requirements, the demand for thermal control PI films is still large. It is expected that the company’s thermal control PI film business will maintain a large market in the short term. ② Electronic PI film business is the second largest source of revenue of the company, accounting for 32.97%, 31.24%, 20.66% and 33.89% of revenue from 2018 to 2021 respectively. FPC demand expansion, TV high definition and mobile phone full screen trend drive the development of display and driven packaging solutions towards high density, which jointly promote the growth of electronic PI film demand. However, due to insufficient production capacity, the development potential of the company’s electronic PI film business has not been fully released. It is expected that after the Jiaxing plant is completed and put into operation and the production capacity is greatly improved, the company is expected to enter the supply chain of well-known mobile phone manufacturers and become the main supplier, and the electronic PI film business may reach a new level. ③ In addition to thermal control and electronic PI films, electrical PI films are also an important source of the company’s revenue, accounting for 12.26% from 2018 to 2021. At present, the application scope of electrical PI film has been extended from traditional electrical insulation to emerging fields such as high-speed rail transit, wind power generation and new energy vehicles. However, the focus at the current stage is to solve the problems of applicability and safety. It will take some time to realize large-scale production.
CPI film is the key growth point of the company’s vigorous development in the future
The company has independently mastered the core technology of CPI film preparation, and successfully produced CPI film in 2018. These products have excellent optical and mechanical properties and can be folded more than 200000 times. The key performance has passed the evaluation of Chinese terminal brand manufacturers, and the sample sales has been realized. It is expected that after the construction of the company’s CPI special production line is completed, the application of CPI film products in the field of flexible display electronic products such as folding screen mobile phones can be realized, which is expected to fill the Chinese gap in this field.
Profit forecast, valuation analysis and investment suggestions: we predict that the operating revenue of the company from 2022 to 2024 will be 428 million yuan, 606 million yuan and 808 million yuan respectively, with growth rates of 34.3%, 41.5% and 33.4% respectively, and the net profit will be 72 million yuan, 107 million yuan and 161 million yuan respectively, with growth rates of 29.2%, 48.0% and 50.3% respectively, and the corresponding EPS will be 0.40, 0.60 and 0.89 yuan respectively. Calculated by the closing price of 20.26 yuan on April 29, the corresponding PE will be 50.4x, 34.0x and 22.6x respectively. Considering 1) the downstream demand of PI film industry is gradually increasing, the market vitality is stimulated, and the high growth of the company is highlighted; 2) The company’s production line is under intensive construction. It is expected that after all the production lines are completed and put into operation, the company’s production capacity will reach a new level, and the company’s CPI film mass production is expected to usher in a breakthrough; For the first coverage of the company, the company will be rated as “buy”.
Risk warning: there is a risk that there is a large gap between business scale and product technology and international well-known enterprises; Risk of price fluctuation of raw materials such as PMDA and ODA; After the implementation of the raised investment project, the new production capacity is difficult to digest.
