SHANGHAI PRET COMPOSITES(002324)：TAKE THE LEAD IN “NEW MATERIAL + NEW ENERGY”

来源： 2022-12-07 18:49:15

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Company Profile　　Shanghai Pret Composites Co., Ltd. (“the company”) is a China-based company principally engaged in the research, development, manufacture and distribution of polymer materials and high performance fibers and related composite materials. The Company"s main products include modified polypropylene (PP) materials, modified acrylonitrile butadiene styrene (ABS) materials, modified polycarbonate (PC) materials, modified polyamide (PA) materials, thermotropic liquid crystalline polymer (TLCP) materials and polyethylene terephthalate (PET) environmental protection materials, among others. The Company distributes its products in domestic market and to overseas markets. (Source: MarketScreener)　　Comments　　As the costs of raw materials for the company’s modified plastics business decline, the company’s profit returns to its normal level. The binding with the leading car companies and new energy vehicle companies also contribute to the company’s steady profit growth.　　In 2021, the prices of PC and ABS rose markedly, dampening the company’s profitability. As the raw material prices have fallen in 2022, the company’s profitability is expected to improve. The company’s modified plastic products have become a part of the supply chain of leading automobile manufacturers and global auto parts companies, so its revenue is expected to maintain stable growth moving ahead.　　The demand for LCP materials is huge, and the domestic substitution is set to promote the company to scale up.　　With the rapid development of electronics, electrical and aerospace industries, the “domestic substitution” of upstream core materials is urgent. At present, the company is the only enterprise in China that connects the industrial chain and that has the technologies and mass production capabilities for LCP resin synthesis, modification, film blowing, and spinning. The LCP industry is set to contribute more to the company’s profits in the future.　　The company enters the battery track by acquiring Highstar, and the energy storage business implicates stronger growth potential.　　Highstar has been engaged in the field of battery for 30 years and has strong accumulation in technology, product and customer. In the field of backup battery for telecom, Highstar has won the order of China-Tower. In the field of energy storage, Highstar has been included in the supply chain of many mainstream customers, such as Neovoltaic and Dyness.　　As 5G base station construction and household & industrial energy storage have rising demand for lithium batteries, and as the company’s production capacity grows rapidly, the battery business will be a new driver of the company’s growth.　　Earnings forecast and investment recommendation　　The binding with top car companies in the traditional modified plastics business will maintain the company’s stable growth, and its LCP material business will also grow strongly by virtue of the 5G construction, which will contribute more to the company’s profits in the future.　　The company’s new growth point will by brought by its acquisition of Highstar and development of the lithium battery business, as well as by the rapid growth of the electrochemical energy storage market.　　Amid the company’s strategic transformation of the dual major businesses of “new materials + new energy”, we estimate its net profit attributable to shareholders at CNY275 million, CNY762 million and CNY1133 million for 2022, 2023 and 2024 respectively, corresponding to a PE ratio of 61.4x, 22.1x, and 14.9 respectively, based on the closing price on December 2, 2022.　　We cover the company for the first time and give it a rating of “Outperform”.　　Potential risks　　Less-than-expected downstream demand; slower-than-expected progress of capacity expansion and launch; raw material price fluctuation and supply risks; intensified market competition.【免责声明】本文仅代表第三方观点，不代表和讯网立场。投资者据此操作，风险请自担。

关键词： composites