\u3000\u3 Shengda Resources Co.Ltd(000603) 650 Red Avenue New Materials Group Co.Ltd(603650) )
[matters]
The company recently disclosed the announcement that the wholly-owned subsidiary plans to purchase 33.01% equity of Beijing Beixu Electronic Materials Co., Ltd. from Shanghai Zhengfang Chemical Co., Ltd. for 197 million yuan. After the completion of this acquisition, the company will hold 81.14% equity of Beixu electronics, which will be included in the scope of the company’s consolidated statements and changed from a joint-stock company to a holding subsidiary.
Beixu electronics is the first local manufacturer of TFT-LCD array photoresist in Chinese Mainland and the largest local supplier of liquid crystal positive photoresist in China. In 2021, Beixu electronic panel photoresist business achieved a revenue of 256 million yuan, with a year-on-year increase of 22.70%. The sales volume of photoresist products increased by 21% year-on-year, accounting for about 19% in China. It is the second largest supplier in China, accounting for more than 45% in BOE, and other panel enterprises are also actively promoting it. The new production capacity construction progress of Beixu electronics is in line with the expectation. The positive photoresist project with an annual output of 6000 tons of Qianjiang factory has been officially put into operation in January 2022, and is gradually expanding the market and increasing production capacity.
[comments]
The company is mainly engaged in electronic materials, special materials for automobile / tire and fully biodegradable materials. The company focuses on the development of electronic materials business, takes the domestic substitution of key materials as its own responsibility, carries out all-round layout, and is committed to becoming a world-class platform enterprise of electronic materials related to semiconductors and display panels. The company’s electronic materials mainly cover semiconductor photoresist and supporting reagents, display panel photoresist and electronic phenolic products. Semiconductor photoresist business: in 2021, the market share of line g photoresist reached 60% in 2021. The batch supply of line I photoresist and KrF photoresist includes 13 12 inch customers and 17 8-inch customers such as Semiconductor Manufacturing International Corporation(688981) , Huahong Hongli and Changjiang storage. The panel photoresist business began in 21q2. The new high sensitivity photoresist used in 4-mask process solved the technical shortcomings of Beixu photoresist, and was successfully mass produced in BOE. For AMOLED panel customers, the high-performance and high-resolution photoresist developed by the company is expected to achieve mass production and sales in 22q2 in the comprehensive verification of BOE. At the same time, high-sensitivity and low-temperature photoresists are also actively developed and expected to achieve mass production in 2022.
After the acquisition, Beixu Electronics will change from a joint-stock company to a holding subsidiary, which is in line with the company’s development strategy and will give better play to the strategic synergy. The company’s vision is not only to solve the problem of “neck sticking” of high-end materials, but also to become a world-class Chinese photoresist brand. Beixu’s mature product technology and market resources help the company to continue to introduce and develop electronic chemical technology for display panel, which is an important measure to realize localization in the field of photoresist for display panel
[investment suggestions]
The company takes the domestic substitution of key materials as its own responsibility and carries out all-round layout. The business of electronic materials covers semiconductor photoresist and supporting reagents, display panel photoresist and electronic phenolic products. Through endogenous extension and extensive interaction between upstream and downstream leading enterprises in the industry, it has become the leader in the field of photoresist production in China, and new products and businesses have made breakthroughs. It is estimated that the company’s revenue from 2022 to 2024 will be 3.289 billion yuan, 4.375 billion yuan and 5.344 billion yuan respectively, the net profit attributable to the parent company will be 469 million yuan, 690 million yuan and 876 million yuan respectively, and the EPS will be 0.78, 1.16 and 1.47 yuan / share respectively, corresponding to 35, 24 and 19 times of the current PE respectively, which will be rated as “overweight”.
[risk tips]
Downstream market demand is lower than expected
Sharp fluctuations in raw material prices
The development progress of new products and technologies is lower than expected
