Pioneering securities: Tongcheng new materials local photoresist leader layout degradable plastic two-wheel drive

Event: Japan Shin Yue Chemical KrF photoresist production capacity is insufficient, a number of Chinese mainland wafer factories have been affected, some enterprises have even been cut off supply, domestic KrF photoresist ushered in the development opportunity.

Comments:

The company is the only company in China that can supply KrF photoresist in bulk to local 8-inch and 12-inch wafer factory customers. Due to Earthquake, the Fukushima factory of Xinyue Chemical KrF Photoresist, one of the world's top eight photoresist manufacturers, has been closed, its production capacity has been limited, and the export of photoresist to China has been restricted. At the same time, due to the new production capacity of global wafer factories and the high demand for photoresist, the supply of photoresist continues to be tight. Because the photoresist industry has extremely high industry barriers, it presents the situation of oligopoly, which has been monopolized by Japanese and American professional companies for many years. At present, the top five manufacturers account for 87% of the global photoresist market, and the industry is highly concentrated. Beijing Kehua is the only Chinese photoresist company listed by SEMI as one of the top eight photoresist companies in the world. at present, Tongcheng Electronics, a wholly-owned subsidiary of Tongcheng New Materials, directly owns 42.26% of Beijing Kehua, which is the same as Meng Tehcnology Inc.. As a concerted actor, it holds a total of 56.23% of Beijing Kehua, making it the largest shareholder. The company recently announced that Tongcheng Electronics, a subsidiary, has invested 570 million yuan to build an annual production project of 11000 tons of semiconductors, photoresist for flat panel display and 20, 000 tons of related reagents in Shanghai, which is expected to be completed and put into production by the end of 2021. At present, Beijing Kehua has a total production capacity of 500t / year for gram I line photoresist and 10t / year for KrF photoresist. At the same time, only Beijing Kehua EUV photoresist is in the early research stage in China.

The company is currently the only Chinese company authorized by BASF PBAT patent technology. The company signed an agreement with BASF on May 28, 2020 to produce and sell PBAT, products under BASF's authorization and hand them over to BASF as raw materials. The company is currently the only Chinese company authorized by BASF PBAT patent technology. Backed by BASF, the company will invest about 670 million to build a project of 100,000 tons / year of biodegradable materials (phase I), including a new plant in Shanghai with an annual capacity of 60,000 tons of PBAT, which is expected to be put into production in 2022. According to our estimation, the domestic demand for degradable plastics is more than 5 million tons, but the current domestic production capacity is only about 200000 tons, and there is a huge market space in the future.

Card position in the two major gold tracks, optimistic about the strategic layout of the company: Tongcheng Xinliao adheres to the "one body and two wings" development strategy through the horizontal and vertical extension of the industrial chain. Deep ploughing vehicles with special materials and active layout of electronic chemicals, degradable plastic two major gold track to achieve two-wheel drive, to the world's leading integrated service provider of new materials. We are optimistic about the strategic layout of the company, and it is expected that the company will achieve a net profit of 510 million / 660 million 790 million in 21-23 years. We will consider issuing diluted EPS0.86/1.13/1.34, corresponding to PE39.5/30.1/25.3 times, and give it a "buy" rating for the first time.

Risk hint: research and development progress is not as expected, overseas technology blockade