Rising industries: driving the blowout development of new chemical materials

Recently, the National Bureau of statistics released the results of the fourth national economic census. Data shows that by the end of 2018, there were 66000 Enterprises above Designated Size engaged in strategic emerging industry production nationwide, accounting for 17.7% of all enterprises above designated size. The rapid landing of new industries brings good opportunities for the development of new chemical materials in China. Huitian new material (300041) and Kangda new material (002669), which are widely distributed in new chemical materials, are recommended by securities companies. With the rapid development of communication, new energy, biology, high-end equipment, environmental protection and energy saving and other emerging industries, the market demand for high-end chemical new materials is imminent. The new material industry is also one of the seven strategic emerging industries in China, which is the industrial basis for the transformation and upgrading of the whole manufacturing industry. Driven by national policy and downstream market, China's new material industry has maintained a rapid growth trend. According to Guosheng Securities Research Report, China's new material industry has been growing at a CAGR rate of more than 24% for many years, and it is estimated that the market size of China's new material market will reach 6 trillion yuan by 2020.

However, many areas are still far behind the developed countries. According to the research results of the Ministry of industry and information technology on 130 key materials, 32% of them are still blank in China, 52% are still dependent on imports, and the demand for localization of new materials is very urgent. The 13th five year plan also takes 2020 as the first target time point for the development of new materials in China, striving to make a number of new material varieties enter the global supply chain, and the self-sufficiency rate of major key materials will exceed 70%. Guojin Securities believes that the country's increasing support in emerging industries provides a good soil for material innovation. Huitian new material, Kangda new material and other listed enterprises deserve special attention. On October 10, Kangda new material announced that the company's meeting passed the proposal on signing the project investment and construction agreement and the proposal on signing the business supporting project agreement and implemented them specifically. The project involves the construction of 100000 tons of chemical adhesives and upstream and downstream new materials project with a total investment of about 1.4 billion yuan. On November 19, Huitian new material disclosed that it planned to increase its capital by 90 million yuan to Guangzhou Huitian, a wholly-owned subsidiary, and set up communication electronic material technology research institute to establish a technology research and development application platform for 5g, high-end adhesive and other new materials in the field of communication electronic industry, so as to promote the upgrading of the company's industrial structure and improve the company's comprehensive competitive strength. According to the announcement, the purpose of the capital increase and the establishment of communication electronic material technology research institute is to enhance the strategic layout of 5g, communication electronic adhesive and other new materials, seize the cooperation and development opportunities provided by Huawei and other customers, and improve the product technology level of 5g, communication electronic adhesive and other new materials and the service ability for industry benchmark customers. According to the analysis of the insiders, Huitian new material is the leading enterprise of engineering adhesive in China. This action is to better seize the opportunity of Huawei as the representative of the import substitution of communication electronic adhesive.