China Securities: Yuanchen Technology In-depth Report

Dec 05, 2022
The company is mainly engaged in the research and development, production and sales of filtration materials, flue gas purification series of environmental protection products, the main products are various types of high temperature and corrosion resistant filter bags and SCR denitrification catalysts, which can be applied to power, steel and coking, waste incineration, cement and glass industries. 2017-2021 the company's operating revenue CAGR is 17.11%, the net profit attributable to the mother CAGR is 18.35%.

Both filter bags and catalysts have the property of consumables, with an average replacement cycle of 3-4 years. The company's filter bag business strength areas in electricity and waste incineration: the power industry price factor dominates, the company's market share in the top three; in the field of waste incineration, the company is in the market leader, with the largest manufacturer of waste incineration Everbright in-depth cooperation has accumulated a lot of business. The company's catalyst business strength areas are in power, steel and small boilers: the company has the top three market shares in regional power plants and small boilers, and the first market share in the steel industry.

Power industry benefits from coal power investment, non-electricity industry accounted for an increase. Electricity is the company's first major business, the electricity stock market is stable, the market size of filter bags and denitrification catalysts is about 2.5 and 5 billion yuan respectively. Under the urgent demand of supply preservation + peak regulation, coal power investment starts to return to growth, and new coal power units are expected to bottom out in the next few years, bringing new installation demand for filter bags and denitrification catalysts in the power industry. Non-electric industries such as steel, cement, waste incineration, flat glass, ceramics and non-electric coal-fired boilers will become the main battlefield for ultra-low emission transformation, providing major increments, especially in the cement track, where provincial and municipal policies have yet to be fully up and the overall catalyst transformation rate is less than 10%, leaving a wide space. It is expected that in 2022 the non-electricity industry filter bag, denitrification catalyst market size of about 10, 5 billion yuan, respectively, the company's products from the power industry to the power and non-electricity synergistic development, the current non-electricity industry revenue accounted for more than 50%. With the national environmental protection policy tightening, the competitive ability of weak small and medium-sized enterprises will continue to exit, the company with production capacity expansion gradually landed, the market share is expected to continue to improve.

Wide temperature differential catalysts adapted to flexibility retrofits to market. Large-scale access to new energy sources makes the construction of peaking capacity crucial, and thermal power flexibility transformation is the lowest cost way. During the 14th Five-Year Plan period, China needs to complete the flexibility transformation of 200 million kilowatts of coal power units, and the thermal power flexibility transformation market is expected to explode. The company has successfully developed a wide temperature difference denitrification catalyst to help coal power units to peak and pilot, which has the characteristics of high activity, low ammonia escape rate (less than 3ppm) and small SO2/SO3 conversion rate (less than 1%) in the range of 250-400℃.

PET copper foil is expected to gradually replace pure copper foil as the industrialization of PET copper foil picks up speed, and the company's early layout of composite fluid collection has the advantages of technology, location and talent. The company's wholly-owned subsidiary, Compher Testing, specialises in the testing of denitrification catalysts and environmental protection filter materials and the performance acceptance of environmental protection equipment and facilities, and has developed into a third-party testing company in the field of ecology, environment and environmental protection. The Company has laid out the regeneration of denitrification catalysts to form a closed loop of denitrification catalyst industry. Gas sensor can realize the early monitoring of thermal runaway of power battery. The hydrogen sensor developed by Anhui Wina IOT Technology, a wholly-owned subsidiary of the company, and the Chinese Academy of Sciences have been successfully developed, which is mainly applied in the fields of thermal runaway monitoring of power battery, hydrogen filling station and hydrogen storage system monitoring.

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