Xi'an Manareco(SH:688550)2025-01-15 08:20Investment Rating - The report initiates coverage with a rating of "Buy" for the company [2][9]. Core Views - The company leverages its strong chemical synthesis and process scaling capabilities to create a diversified platform for customized new materials, expanding its business from liquid crystal displays to OLED materials, pharmaceuticals, photoresists, and polyimide [6][8][20]. - The expected net profits for 2024-2026 are projected to be CNY 242 million, CNY 329 million, and CNY 412 million respectively, with corresponding P/E ratios of 23, 17, and 13 [6][9]. - The company is positioned to benefit from the recovery in the display materials sector, particularly in OLED materials, which are expected to see significant growth due to increasing penetration rates and demand from the consumer electronics market [10][46]. Summary by Sections 1. Strong Chemical Synthesis and Process Scaling - The company started with liquid crystal materials and has diversified into various sectors, including OLED materials and pharmaceuticals, utilizing its core organic synthesis and purification technologies [20][21]. - It has established itself as a strategic supplier for major international companies in the liquid crystal and OLED sectors, with a robust product pipeline [22][30]. 2. Display Industry Recovery - The display materials segment is expected to recover steadily, with OLED materials showing rapid growth due to increased market demand and technological advancements [46][48]. - The company is well-positioned to capitalize on the domestic LCD market's growth, which has seen a significant shift towards local suppliers [50][54]. 3. Pharmaceutical CDMO Business - The company is expanding its CDMO business by integrating intermediate and active pharmaceutical ingredients, with a strong pipeline of over 200 products [22][30]. - Collaborations with international pharmaceutical companies enhance its market presence and growth potential in the pharmaceutical sector [22][30]. 4. Platform Development in Electronic Materials - The company has been developing semiconductor photoresists and other electronic materials since 2015, with new products expected to enter the market and drive growth [11][20]. - The platform approach is anticipated to yield significant growth opportunities as new products gain traction in the market [11][20]. 5. Financial Projections and Valuation - The company is projected to achieve total revenues of CNY 1.49 billion, CNY 1.82 billion, and CNY 2.14 billion for 2024, 2025, and 2026 respectively, with corresponding growth rates of 23.3%, 22.3%, and 17.6% [7][9]. - The average P/E ratio of comparable companies is estimated at 22X for 2025, while the company is expected to have a P/E of 17X in 2024, indicating a favorable valuation [6][9].