Investment Highlights:
The company focuses on the research, development, production, and sales of polymer additives and functional polymer materials. Its main products include compatibilizers, impact modifiers, and adhesive resins. With strong technical R&D capabilities and high-quality products, the company has built an extensive customer base. As one of the early enterprises to achieve domestic production of compatibilizers, the company's compatibilizer products held approximately 8.07% market share in 2024, maintaining a leading market position.
The global polymer additives and functional polymer materials industry shows rapid growth trends. The global polymer material additives market reached $110.3 billion in 2021, with an annual compound growth rate of 21.65% from 2013-2021. As the world's largest consumer market, China's plastic additives industry, which started in the 1970s, has formed a complete system. The market size was $7.39 billion in 2020 and is expected to reach $9.781 billion by 2026, with an annual growth rate of 4.78%. China's plastic modification rate increased from 16.3% in 2011 to 23.6% in 2022, but remains below the global average, indicating significant future growth potential.
Downstream applications are extensive with strong demand across various sectors. The company's products are widely used in multiple downstream industries, including automotive, cables, electronic appliances, composite building materials, barrier packaging, and photovoltaic components. In the automotive sector, the company's products support new energy vehicle lightweighting while meeting low VOC environmental requirements. In the cable industry, the company's low-smoke halogen-free flame retardant materials ensure circuit integrity during fires. In the photovoltaic component field, the company's functional masterbatches meet the stringent requirements of new battery technologies. Strong demand across application sectors drives the polymer materials industry toward high-performance, environmentally-friendly, and specialized development. The automotive lightweight materials, electronic appliance specialty materials, and photovoltaic encapsulation materials segments are expected to remain prosperous over the next five years.
The company demonstrates significant advantages in technical R&D, product quality, and market expansion. Relying on a high-end R&D team, the company has independently developed 51 invention patents and created high-performance products including low VOC polypropylene compatibilizers and nylon impact modifiers. The company's product line covers multiple categories and industries, providing high-quality and stable products for automotive, cable, electronic appliance, composite building materials, barrier packaging, and photovoltaic component sectors. Through technological advantages and quality service, the company has secured renowned domestic and international enterprise customers including King-Fa Science & Technology, Pret, LG, and Borouge, demonstrating strong market competitiveness.
Earnings Forecast, Valuation Analysis, and Investment Recommendation: The company's revenue showed continuous growth from 2022-2024, reaching 556 million yuan, 569 million yuan, and 611 million yuan respectively, with year-on-year growth rates of 5.02%, 2.44%, and 7.26%. Net profit attributable to shareholders continued growing from 2022-2024, reaching 21.86 million yuan, 49.81 million yuan, and 55.94 million yuan respectively, with year-on-year growth rates of -9.45%, 127.80%, and 12.31%. Among comparable companies, Ruifeng New Materials, Lushan New Materials, Hanwei Technology, and Chenghe Technology show similarities in product structure and application fields. Hanwei Technology and Chenghe Technology's 2024 PE ratios of 85.22x and 25.75x respectively appear relatively reasonable, providing meaningful valuation reference. The company's post-issuance share capital totals 81.6917 million shares (including over-allotment), with the issuance price corresponding to a post-issuance market value (including over-allotment) of 589 million yuan. The relatively low market value corresponds to a 2024 price-to-earnings ratio of 10.53x, representing a discount compared to comparable companies.
Risk Factors: Raw material price volatility risk; intensified industry competition risk; macroeconomic cyclical fluctuations leading to decreased downstream demand risk; insufficient new customer development risk; unsustainable tax incentive risk; R&D personnel turnover risk; core technology leakage and infringement risk; Ganzhou factory repurchase risk; defective property risk.
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