Wanwei High-tech (600063) Company In-depth Study: Three Highlights of PVA Demand Are Worth Looking Forward

Wanwei High-tech (600063) Company In-depth Study: Three Highlights of PVA Demand Are Worth Looking Forward
Report summary: The main business has passed the cold winter, and the PVA leader has entered the harvest period. PVA prices have steadily increased since 2018. Among them, the decline in prices of major raw materials calcium carbide and acetic acid in 2019 has widened the PVA spread.We estimate the current company’s PVA gross profit per ton is about 4040 yuan, net profit per ton is about 2600 yuan.As the leader of PVA, the company has a market share of more than 35%, and its performance is flexible.  The supply situation has improved significantly. The short-term and mid-to-long-term basic industries have experienced many years of downturn since 2008-2016. After undergoing the reshuffle of 杭州夜网论坛 the industry, companies with insufficient advantages have changed, and have gradually stopped production and exited.At present, the industry has formed a three-system layout represented by the Anhui Department, the Sinopec Department and the Private Department. The three departments account for about 80% of the effective domestic production capacity. The concentration of the PVA industry has been improved.  The demand for PVA has been increasing, and the company’s production and sales have increased at a faster rate.In 2019, the industry’s PVA production and sales have increased at a faster rate than in 2018. Some companies, such as Wanwei High-tech, have grown and increased.In a certain period of 2006, the highest growth rate was about 15%. Faster growth is expected in two aspects: first, the export continues a good growth trend, and second, the demand for new materials such as PVA optical films and PVB continues to grow.  Downstream new material applications continue to be developed. Three highlights are worth looking forward to. The downstream new material field is expected to become a growth point that drives the demand for PVA, which are polarizers and optical films, PVB, and high-strength high-mode fibers.The company’s 7 million square meters of polarizers and supporting optical film projects are expected to be put into production in the next year. The industrialization experience of 5 million square meters of PVA optical films has been achieved before.The company’s PVB film has reached the standard for architectural safety glass, and is expected to further develop into windshields in the automotive field in the future.After years of development and cultivation of high-strength and high-mold, the production and sales volume in recent years has ushered in a breakthrough growth, and the process of replacing asbestos has continued to accelerate.  Investment suggestion As a leader in PVA industry integration, the company will benefit from the upward price of PVA.We expect the company’s EPS for 2019-2021 to be 0.21.0.29, 0.39 yuan, corresponding to the current expected PE of 17.3, 12.7 and 9.4 times, the company PB (MRQ) is 1.46 times, ranking second in the industry.07 times, give “recommended” rating.  Risks prompt the industry to exit production capacity and resume production beyond expectations; raw material prices have risen sharply, and the progress of polarizers has fallen short of expectations.