Investment Rating - The report assigns a "Buy" rating for the company, marking it as a first-time coverage due to its position as a global leader in pearlescent pigments and the potential underestimation of its performance [6][9]. Core Insights - The company has established itself as a leader in the global pearlescent pigment industry through strategic acquisitions, including the integration of Korean CQV and German Merck's surface solutions business (SUSONITY), which positions it well for future growth [8][11]. - The report highlights the high growth potential of the pearlescent pigment market, driven by increasing demand in high-end applications such as cosmetics and automotive coatings, with a projected CAGR of 13.99% from 2016 to 2023 [48][54]. - The company is expected to see significant revenue growth, with projected revenues of RMB 3.52 billion in 2025, reflecting a year-on-year growth rate of 114.85% [7][9]. Summary by Sections Company Overview - The company, originally founded as Guangxi Qise Pearlescent Effect Materials Co., Ltd. in 2011, has grown to become a global leader in pearlescent pigments, successfully listing on the Hong Kong Stock Exchange in 2021 and expanding its global footprint through acquisitions [17][24]. Financial Performance - The company has maintained a strong revenue growth trajectory, with a CAGR of 36.58% from 2017 to 2024, and an increase in gross margin from 43.99% in 2017 to 53.34% in 2024 [32][37]. - The report forecasts net profits of RMB 1.91 billion, RMB 5.29 billion, and RMB 10.05 billion for 2025, 2026, and 2027, respectively, with corresponding P/E ratios of 41, 15, and 8 [9][10]. Market Dynamics - The pearlescent pigment industry is characterized by high growth potential, low price sensitivity, and strong brand loyalty, making it a unique investment opportunity [11][45]. - The report emphasizes the importance of synthetic mica as a superior alternative to natural mica, addressing supply chain challenges and enhancing product quality [67][74]. Growth Drivers - Key growth drivers include the successful integration of acquired brands, expansion of production capacity, and the increasing demand for high-end applications in cosmetics and automotive sectors [8][11][61]. - The company plans to expand its domestic production capacity to approximately 48,700 tons, which is expected to support revenue growth and improve operational efficiency [61][79]. Competitive Landscape - The competitive landscape is dominated by major players such as Merck and BASF, with the company positioned to capture market share through its strategic acquisitions and product innovations [54][56]. - The report notes that the high-end market for pearlescent pigments is characterized by significant barriers to entry, making it difficult for new brands to penetrate [54][56].