\u3000\u3000 Hubei Dinglong Co.Ltd(300054) (300054)
Hubei Dinglong Co.Ltd(300054) : polishing material faucet to build photoelectric semiconductor platform. Hubei Dinglong Co.Ltd(300054) is the leader of polishing materials and printing consumables in China. Since its establishment, it has always focused on the import substitution of high-end new materials in industries supported by the state. At present, the company has formed three business segments: 1) semiconductor materials, including CMP materials, cleaning materials and advanced packaging materials; 2) Flexible display materials, including YPI, PSPI, tfe-ink, etc; 3) Printing and copying consumables form the layout of the whole industry chain from toner / ink to toner cartridge / ink cartridge. At the same time, relying on the accumulation of talents and technologies for more than 20 years, the company has built seven technology platforms, including polymer synthesis, organic synthesis, physical chemistry, inorganic non-metallic, etc., to escort the research and development of new products.
Semiconductor materials have a long slope and thick snow, and the platform layout creates a leader. The construction of China’s wafer factories is in full swing, bringing broad incremental demand for semiconductor materials. According to the data of Jiwei consulting, from 2020 to 2025, the capacity of China’s local wafer factories will increase from the existing capacity of 1625000 chips to 4622000 chips (equivalent to 8-inch chips), an increase of 184.4%. At present, the semiconductor materials represented by CMP are still mainly monopolized by American and Japanese manufacturers, and the demand for localization is very urgent. The company started the research and development of polishing materials as early as 2013. After nearly ten years of accumulation, it has formed a comprehensive layout from mature process to advanced process and from hard pad to soft pad. At present, the company’s polishing pad business is in the performance release period. From 2018 to the first three quarters of 2021, the revenue of polishing pad increased from one million to 193 million yuan, and its gross profit margin also increased significantly from 16.06% to 59.30%. In addition, the company has successively arranged core semiconductor materials such as polishing fluid, diamond correction disk and cleaning fluid, which continues to provide growth momentum for the development of the company.
Flexible display is ready, and the core material space is broad. Benefiting from the continuous penetration of flexible AMOLED and the maturity of new forms such as folding screen, the boom of flexible display is rising, and the investment opportunities of core flexible materials represented by PI slurry are highlighted. Relying on its own organic synthesis platform, Dinglong has developed a variety of soft display materials such as YPI, PSPI and tfeink, successfully breaking the overseas monopoly. At present, the company’s PI slurry has obtained batch orders from China’s leading customers such as Huaxing optoelectronics, and the PI slurry production line with an annual output of 1000 tons has also been put into operation, with a continuous and stable supply capacity. Flexible display is expected to gradually grow into one of the company’s main businesses.
Printing consumables have entered a steady state, and the advantages of integration are prominent. The market competition of printing and copying general consumables industry is becoming increasingly fierce, and the industry has gradually entered a steady state. The printing consumables business segment of the company has formed a highly competitive whole industry chain model, and has become a market-oriented innovation integrator with the most complete product system, the largest technology span and based on independent intellectual property rights and proprietary technology among the global manufacturers of laser printing and copying general consumables. Taking the whole industry chain operation as the development idea, the company provides core raw materials of printing and copying consumables such as color polymer toner, consumable chip and developing roller in the upstream, and sells two terminal consumables products of toner cartridge and ink cartridge in the downstream, so as to realize the linkage between the upstream and downstream of the industry, support the dominant position of the company, and is expected to continue to expand market share and realize steady growth of scale.
Investment suggestion: Hubei Dinglong Co.Ltd(300054) is a leader in China’s semiconductor material industry, with strong independent development ability and market competitiveness. As the company further expands its business scope, the company’s performance will usher in further volume. We expect that the company will achieve revenue of RMB 2.306/29.82/4.113 billion in 2021-23; The net profit is RMB 234 / 356 / 604 million, corresponding to the current price of pe86 / 57 / 33 times in 2021-23. Combined with the valuation of comparable companies, it will be covered for the first time and given a “recommended” rating.
Risk warning: product verification is not as expected; Cyclical fluctuations in downstream industries; Market competition intensifies.
