Wansheng (603010): G new infrastructure will lead to increased supply and demand tension of flame retardants!

Wansheng (603010): G new infrastructure will lead to increased supply and demand tension of flame retardants!

Investment logic We believe that the flame retardants of Wansheng (accounting for 80 +% of its main revenue) will be in a long-term price and price increase channel: On February 22, 2020, the Ministry of Industry and Information Technology reorganized”Resumption of work video conference”, the latest meeting of the Ministry of Industry and Information Technology proposed “to accelerate the pace of 5G commercial use and promote the continuous development of the information and communications industry.

We believe that 5G new infrastructure will significantly boost the demand for engineering plastics phosphorus-based halogen-free flame retardants.

And from a global perspective, due to the high production technology of engineering plastics phosphorus-based halogen-free flame retardants and high safety and environmental protection barriers, the new production capacity cycle is long and the customer certification cycle is long.

At present, from the perspective of public information, new energy under construction in the world is small, so we judge that this part of supplementary production capacity is difficult to meet the rapid development of the new energy vehicle industry and the European Union ‘s new regulations on consumer electronics environmental protection in 2021.Additive demand for halogen-based flame retardant substitutes in two aspects, and 5G new infrastructure will continue to increase the supply and demand of halogen-free flame retardants for engineering plastics.

  New 5G infrastructure drives increased use of flame retardant engineering plastics: 5G equipment drives increased use of flame retardant engineering plastics.

5G base stations mainly include four types of base stations according to coverage.

We believe that the large increase in the number of base stations is driving the demand for flame retardant engineering plastics (PC, low dielectric loss PPS, low dielectric loss PPO, LCP, and poly substitution).

According to calculations, we believe that the construction of base stations in the next five years will drive an average of 0 plastic flame retardants per year.

85%?
1.

25% demand growth.

  Consumer electronics drive the volume of halogen-free flame-retardant engineering plastics: In the 5G era, portable consumer electronics devices such as mobile phones / tablets are subject to millimeter-wave penetration attenuation and antenna volume increases.

The large dielectric loss caused by metal backplanes is expected to be gradually replaced by engineering plastics, glass and ceramic backplanes.

We believe that engineering plastics are enough to make them cheap, durable, and low dielectric loss. Although there are short 杭州桑拿网 boards in heat dissipation, they will still be widely used in the low-end replacement.

Computer-side plastic cases benefit from increased EU penetration.

Consumer electronics will drive demand for engineering plastic flame retardants by 2% over the next three years.

  New energy vehicles are still the number one driver of the flame retardant market.

2019?
In 2021, the volume of new energy vehicles (including but at least additional battery packs) and charging piles (various types of charging pile components) will drive the total demand for phosphorous flame retardants in the market for composite materials to 6

8%.

  Investment suggestion We are optimistic about the growth of new energy vehicle sales and the growth opportunities of flame retardants driven by new infrastructure to maintain the company’s future 6-12 months21.

42 yuan target price.

Company 2019?
EPS0 in 2021.

50/0.

64/0.

83 yuan, three-year compound net profit intensity (CAGR3) reached 39%, corresponding to 2019?
2021 price-earnings ratio of 26.

95/20.

91/16.

18 times.

  Risk Warning 1.

Global new energy vehicle growth is below expectations2.

Macroeconomic recession 3.

The risk of fair lifting of the ban 4 The risk of increased competition in the industry 5 The risk of exchange rate 6 The risk of impairment provision 7.

5G industry growth is less than expected8.

Other force majeure

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