Foster (603806): Photovoltaic EVA film faucet that stands still during cyclical fluctuations
Investment advice Foster is the leader in photovoltaic EVA film sub-sectors, and we expect to account for more than 50% of the global 重庆耍耍网 market share based on the estimated volume in 2019.We maintain the company ‘s Outperform rating for the following reasons.  Photovoltaic film sub-plate competition is excellent, leading has first-mover advantage.Although plastic film products account for only about 5% of the component cost, any flaws directly affect the life of the module and the efficiency of power generation. The downstream component manufacturers are not sensitive to the price.Up high.We believe that the current gross profit margin level of film has returned to 18% -20%, and new entrants have limited operating space to gain market share through price warfare.At present, domestic companies in Foster and elsewhere occupy more than 70% of the global market share, and their leading positions are stable. Excellent company genes are expected to meet the challenges of potential new entrants.After Foster’s listing, it has maintained a return on total assets of more than 10% for 佛山桑拿网 a long time (average A-share photovoltaic manufacturing industry below 6%), showing the company’s efficient asset operation and profitability.At the same time, the company’s four expense ratios 1 remained at about 8% (average 11-15% for A-share photovoltaic manufacturing). We estimate that the gross profit margin of the film can be reduced by 15% under pessimistic assumptions.The level of net interest rate ensures that the company meets potential challenges. Continue to lead the industry’s innovation and explore new growth points for domestic production of photosensitive dry films.The company launched white EVA and subsequent POE film products in 2016, leading the innovation of photovoltaic module packaging materials.Since 2015, it has been involved in the research and development of photosensitive dry films for semiconductor PCBs, and has deployed Linan production and Huizhou slitting bases.We estimate that by 2021, new photovoltaic adhesive films and photosensitive dry film products will contribute more than 50% of profit, and the compound growth rate of profit will reach 39% and 306%, respectively.  Earnings forecasts and estimates Taking into account the rise in the average price of the film and the confirmation of the recovery of photovoltaic demand, we have raised our profit forecasts for 2019 and 2020 to 11, respectively.4% and 9.5% to 7.600 million and 9.300 million.and?Profit forecast for 2021 11.400000000.Based on the segment aggregate assessment method and profitability in 2021, we raise the company’s target price by 4.9% to 51.4 yuan, corresponding to 35 times, 29 times and 24 times price-earnings ratios in 2019, 2020 and 2021, respectively, maintain outperform industry rating.There is 13% upside compared to the current total.The current general trading is 31 times, 26 times and 21 times price-earnings ratios in 2019, 2020 and 2021.  Risks Positive risks include higher-than-expected demand for overseas or domestic parity projects, which drives the price of EVA film upwards than expected; risks include weak overseas photovoltaic demand, dragging down the price of EVA films beyond expectations, and unforeseen risk events in crude oil supply, leading to raw materialsEVA resin prices rose more than expected.

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