Red Avenue New Materials(SH:603650) Shanghai Securities·2025-03-11 02:40Investment Rating - The report assigns an "Accumulate" rating for the company for the first time [2]. Core Views - The company is a global leader in new materials, focusing on electronic materials, automotive/tire specialty materials, and fully biodegradable materials. It is actively developing its electronic materials business, particularly semiconductor photoresists and display panel photoresists, to address the localization of key materials. The gradual release of production capacity in the electronic materials sector and the large-scale introduction of new photoresist products are expected to drive strong growth in operating performance [2][18]. Summary by Sections 1. Company Overview - The company is a leading new materials service provider with a focus on three main areas: electronic materials, automotive/tire specialty materials, and fully biodegradable materials. It has been expanding its electronic materials business significantly in recent years [18]. - The company has a concentrated shareholding structure, with the controlling shareholder holding over 60% of the shares, allowing for strategic decision-making and resource allocation [24]. 2. Electronic Materials - The company aims to build a platform company in electronic materials, capitalizing on the trend of domestic substitution. The semiconductor photoresist market is expanding, with the company positioned as a domestic leader [2][38]. - The semiconductor photoresist segment is experiencing significant growth, with sales expected to reach 128 million yuan in the first half of 2024, a year-on-year increase of 54.43% [3][54]. - The display panel photoresist segment is also growing, with the company being the largest domestic supplier, achieving a market share of 25.9% in the first half of 2024 [4][63]. 3. Specialty Rubber Additives - The company is the largest supplier of specialty materials for tires globally, with a production volume of 135,000 tons in 2023, representing a year-on-year increase of 16.7% [5]. - The specialty rubber additives business remains the dominant segment, accounting for 77.7% of the company's main revenue in 2023 [28]. 4. Fully Biodegradable Materials - The company has introduced BASF's PBAT technology, becoming a leader in the biodegradable materials sector. However, due to market oversupply, the PBAT production facility is temporarily halted in 2024 [5][10]. 5. Financial Forecast - The company is expected to achieve revenues of 3.278 billion yuan, 3.750 billion yuan, and 4.370 billion yuan for 2024, 2025, and 2026, respectively, with year-on-year growth rates of 11.37%, 14.40%, and 16.53% [11][13]. - The net profit attributable to shareholders is projected to be 572 million yuan, 656 million yuan, and 768 million yuan for the same years, with growth rates of 40.57%, 14.69%, and 17.19% [11][13]. 6. Research and Development - The company has invested over 700 million yuan in R&D from 2018 to 2023, with R&D expenses increasing year-on-year. In the first three quarters of 2024, R&D expenses reached 148 million yuan, a 12.65% increase [34]. - The company has established a professional R&D platform to address high-end material needs in the semiconductor and display industries, with a total of 597 patent applications and 420 patents granted as of 2023 [34].