Analysis of the hottest domestic adhesive industry

Analysis of domestic adhesive industry

analysis of domestic adhesive industry | the high-end field of adhesive has ushered in the window period of import substitution

July 9, 2020

01

the current competition pattern of the adhesive industry

the majority of small and medium-sized enterprises in China's adhesive industry, low industry concentration, late start, and many enterprises. According to incomplete statistics, at present, there are more than 3500 adhesive enterprises in China, and most of them are small and medium-sized enterprises, Among them, more than 1800 are workshop enterprises, and less than 100 enterprises have an annual sales revenue of more than 50million yuan. In 2015, the 13th five year development plan of the industry was released at the 18th Annual Conference of China adhesive and adhesive tape industry. During the "13th five year plan" period, the development goal of China's adhesive industry is to achieve an average annual growth rate of 7.8% in output and 8.3% in sales. By the end of 2020, the total output of adhesives in China is expected to reach 10.337 million tons, with sales of 132.8 billion yuan, accounting for about 1/3 of the world. However, the competition pattern still presents a pyramid structure. International giants such as Henkel, 3M and fule started early, have strong R & D capabilities, and have obvious brand advantages, basically monopolizing the high-end product market. The domestic adhesive market is dominated by small and medium-sized enterprises. Listed companies, including Huitian new material, Kangda new material, GAOMENG new material and Sibao technology, are in the second tier, with certain independent intellectual property rights and technical content. Through continuous technology research and development, the gap with international giants is being shortened

from the perspective of revenue scale in 2019, among the four major domestic adhesive enterprises, Huitian new material has the largest revenue of 1.88 billion yuan, with a gross profit margin of 32.0% in 2019. However, the total market share of the top four leading companies in the industry is less than 15%, and the industry concentration is low. Domestic enterprises still have a lot of room for development in the future

the upstream industry of the adhesive industry is mainly the manufacturer of basic chemical raw materials, including silicone, synthetic resin, acrylic acid and acrylate, MDI, TDI, solvent oil, additives and monopolyurethane: Transformers in materials, etc. The downstream application fields are extremely wide, including construction, building materials, textiles, shoemaking, packaging, printing and binding, aerospace, electronic manufacturing, automobile, machinery, sporting goods and other fields. Among them, the construction and packaging sectors have the largest demand for adhesives, which account for 47.9% of the total consumption of adhesives

according to bckresearch data, in 2017, the global adhesive and sizing equipment market reached US $42.8 billion and US $15 billion respectively, with a total scale of US $57.8 billion. It is estimated that by 2020, the total market size of adhesives and sizing equipment will reach US $77.1 billion, of which the adhesive market will reach US $60billion, with an annual growth rate of about 4.7%

02

the global adhesive industry chain has gradually shifted to China

in recent years, in order to reduce production costs and expand market share, multinational companies that dominate the medium and high-end adhesive field have gradually shifted the production and consumption focus of the global adhesive market to Asia. The Asia Pacific region has gradually become the region with the largest output of adhesives. The market size of the Asia Pacific region has grown rapidly, with a compound annual growth rate of 5%-6%, Higher than the average growth rate of the industry and that of other regions. In 2017, the market size of adhesives in Asia accounted for 43.03% of the world, of which China was the largest market for adhesives in the Asia Pacific region, accounting for 30%

03

emerging high-end fields rise rapidly and are expected to develop rapidly

from the current application pattern of the adhesive industry, domestic leading enterprises such as Huitian new material have occupied a large market share in the fields of new energy photovoltaic, power supply, passenger cars, etc., Kangda new material has occupied 60% of the share in the adhesive used for wind power blades, and GAOMENG new material has a leading advantage in the field of flexible packaging, In these traditional Red Sea fields, the competition pattern of adhesive enterprises has been relatively stable, and most leading enterprises aim to maintain the existing market share, reduce costs and improve profitability

under the influence of trade frictions in the past two years, enterprises represented by Huawei pay more and more attention to the domestic independent control of the supply chain. In order to reduce the dependence on products from the United States and other countries, they began to strengthen the procurement of local products, creating a favorable window for domestic adhesive enterprises to break through and develop in the high-end field. The rapid rise of emerging fields such as 5g communication, electronics and appliances, high-speed rail, urban rail transit and new energy has significantly increased the demand for import substitution of high-end adhesives. It is a blue ocean market for the development of domestic adhesive enterprises. Leading enterprises will invest more R & D investment and human resources in these emerging directions

04

the price of raw materials is at a low level, which is conducive to the expansion of profitability.

the main raw materials of adhesives include silicone, epoxy resin, MDI, TDI, acrylic acid, ester and other bulk chemicals. The raw materials account for more than 70% of the production cost, showing a relatively obvious negative correlation with the gross profit margin of some companies. In, the price of upstream chemical raw materials generally rose, resulting in the decline of gross profit margin of some companies. In the second half of 2018, affected by the slowdown of global macroeconomic growth, the high level of bulk raw materials began to fall. At present, most of them are in the cone area with a sample hole of 1:7 at the bottom of history. For example, the gross profit margin of Huitian new material company has significantly improved from 25.34% in 2018 to 29.68% in the first quarter of 2020. Since 2020, international oil prices and chemical product prices have fallen again. We judge that affected by the epidemic and against the backdrop of the continued slowdown in global economic growth, the price of bulk products may remain low, and the gross profit margin of the adhesive industry is expected to continue to improve

to sum up, various signs show that at present, it is the high-end field to use glue to achieve import substitution, and domestic adhesive enterprises are expected to realize a great opportunity to overtake on the curve. In the near future, we will share the market scale of different application fields such as 5g communication, consumer electronics, rail transit industry, new energy power battery sector, aerospace and so on