All industries are inseparable from materials. Look at the three major opportunities for the domestic new material industry

2022/01/04

According to industry statistics, the import rate of new materials in China is as high as 86%, and the self-sufficiency rate is only 14%. In the foreign embargo list against China, it mainly involves special materials and related equipment, material processing, electronic equipment, computer equipment, communication and information security, sensors and lasers, navigation and aerospace electronic equipment, ships, aerospace and propulsion, etc. Nine major areas, which involve a large number of material (or component) issues, process issues and equipment issues.

In July this year, Japan restricted South Korea's import of key materials such as PI, photoresist, and high-purity hydrogen fluoride for display and semiconductors produced in Japan. These three materials only account for a market of 2.1 billion yuan in the IC market. However, without these three materials, Samsung's panel factory cannot start.

Among the 120 companies currently applying for listing on the Science and Technology Innovation Board, materials companies rank fourth (about 10). But among the 29 listed companies, materials companies ranked second. The products and technologies developed by these enterprises can solve some industrial security problems in our country and realize the localization of key materials, components and equipment.

Is the new material industry worth investing in in 2022?

In 2021, the performance of different industry sectors will be clearly differentiated. On the one hand, traditional white horse stocks will continue to fall, and on the other hand, cyclical stocks and popular track stocks will continue to reach new highs. However, compared with cyclical stocks, market funds prefer popular track stocks. In the final analysis, they still see deterministic performance growth expectations and are in line with the general direction guided by the future policy environment.

From the analysis of the policy environment, the emerging industries represented by the new material industry have received strong support from the policy environment. From the analysis of the medium and long-term development, the development prospects of the new material industry are relatively broad and have certain policy support.

As early as 2016, the "Guidelines for the Development of New Materials Industry" proposed that by 2022, the comprehensive support capacity of key strategic materials will exceed 70%, the innovation ability of new materials will continue to improve, the industrial system will be initially improved, and the key directions for material development will be clarified. In 2021, the Outline of the 14th Five-Year Plan for 2035 clearly states that strategic emerging industries such as new-generation information technology, biotechnology, new energy, new materials, high-end equipment, new energy vehicles, green environmental protection, aerospace, and marine equipment will be gathered to promote strategic emerging industries. The industrial added value accounts for more than 17% of GDP.

From the analysis of the application scenarios of new materials, most of them are inseparable from the hot tracks in the capital market at this stage.

Among them, including new energy, electronic information, aerospace, energy conservation and environmental protection, and national defense and military industry. In addition, from the analysis of segmented fields, it also includes lithium battery materials, photovoltaic cell materials, semiconductor materials, military materials, and subdivided chemical industries. It provides relatively stable performance growth expectations for related industries.

In addition, from the analysis of industry revenue and net profit growth rate, the field of new materials has relatively good investment value, and the certainty of revenue and net profit growth rate is relatively high.

According to the data, as of September 23, the expected growth rate of the main business income of the new material index in 2021 is 51.91%, and the expected growth rate of net profit attributable to the parent is 85.53%. The growth trend will continue in 2022, and the expected growth rate of revenue and net profit is higher than 20%. In other words, even if the valuation of the new material index has increased in the second and third quarters, considering the relatively high performance growth rate, by 2022, the valuation level of the new material index will return to a more reasonable valuation level.

In the final analysis, investing in industries and listed companies still requires investing in expectations. Only with good performance growth expectations and good deterministic development prospects, the market will be willing to give a higher valuation and pricing, which is also the essence of A-share market investment over the years.
As long as the performance growth in 2022 and the next few years remains stable, the investment prospects of the new material industry are still worth looking forward to.
Three major opportunities for the domestic new material industry

 

 

In our investment logic, we will focus on customs data. What materials are imported the most and the customers are concentrated, we will tend to invest in these projects. I have investigated downstream customers: "If domestic companies make these materials, which are similar to imported materials, or whose performance reaches 80%, would you like to buy their materials?" Most manufacturers are willing to try domestic materials. In the current international environment, it is believed that domestic manufacturers are more willing to accept such alternative materials.

This is the first opportunity: domestic replacement. For example, special gases, photoresists, OLED light-emitting materials, metal masks, solder pastes, etc. in semiconductor materials and optoelectronic display materials, as well as various special engineering plastics. In fact, these materials are very mature internationally, but at present most of them can't make high-end products in China or can't make them at all.

Here is an example - a metal mask. Metal masks are a key material used in chip manufacturing. There are about 10 million circuits on the thumb-width chip. This chip is to be fabricated on the carrier tape, which requires the pattern accuracy of the mask to be kept in a seamless correspondence with the precision required for the high-density circuits to be fabricated on the carrier tape. Currently only Japan can manufacture high-precision metal mask materials.

Another material is an OLED light-emitting material. At present, China is the country with the strongest raw materials for producing OLED light-emitting materials, but our purification process can only achieve 99.99% purity, while Japan can purify it to more than 99.9999%. Japan buys our raw materials back for purification at ultra-low prices, and may sell them back to us at 10 times the price.

Materials such as semiconductor materials and optoelectronic display materials are the most promising areas, because these are the much-needed "stuck neck" materials. As an entrepreneur and technologist, this is where you can break through. This type of project is relatively simple. At present, there are many international students in China who are working as R&D and engineers in major world-renowned material companies. You only need to bring these people back to form a team.

The second opportunity is to independently develop high-barrier materials that are banned from foreign countries, such as aero-engine materials and high-performance fibers. A single hair of aramid can bear a finger-thick steel bar, and can withstand high temperatures of 800°C. The carbon fiber T1200 used in the aircraft can greatly reduce the weight of the aircraft. These materials are all super good materials, which are the materials that our country wants to focus on catching up with. They must be used in the fields of aerospace and military industry in our country, but at present, such high-performance materials cannot be made in China (the break-even point of aramid fiber). It is 3000t, we can only do 500t) or can not be industrialized, and many materials are highly technically confidential to us abroad, and they are prohibited from selling to us. These high-barrier materials are often used in the field of military-civilian integration, which involves a large number of materials, processes, and equipment. There are huge opportunities and huge profit margins. This is our chance.

The third opportunity is to independently develop world-leading new materials, such as graphene, nano-silver wires, photosensitive metal pastes, and ultra-smooth materials. These materials, we and foreign countries are on the same level. Such projects require a long period of time. Taking graphene as an example, Tsinghua Research Institute began to study graphene in 2010, but until now, it has only developed and applied its heat dissipation function to make graphene clothes, belts, health care products and other products with great market prospects. However, to develop all the functions of graphene, a long period of R&D and market verification is required.

It takes at least 10, 20 or even 30 years for a material to go from invention to application, which may be more suitable for universities and research institutes to do early academic research and early research and development.

Key words:

New material,Field,Industry,Investment

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