Huitian New Materials (300041) Core Business + Complete Upstream and Downstream Supply Chain

1. Core Main Business (Company primarily specializes in high-performance engineering adhesives, revenue share 80%+, supplemented by PV backsheets)

1. PV Adhesives (Basic business, global leader)

Core products: PV module sealing organic silicone, inverter potting adhesive, ribbon UV adhesive, frame bonding adhesive, junction box sealing adhesive
Industry position: Global market share 45%~50%, No. 1 in China, suitable for all PERC/TOPCon/HJT cell technologies
Supporting new materials: Solar cell backsheet (annual capacity 120M square meters, supporting PV modules)

2. New Energy Vehicle & Lithium Battery Adhesives (Second growth curve)

- Power batteries: PAA/SBR anode binder, battery pack thermally conductive structural adhesive, PACK sealing and potting adhesive, charging pile thermally conductive gel
- Vehicle manufacturing: Body lightweight polyurethane structural adhesive, welding adhesive, glass bonding adhesive, electronic component conformal coating
Customer tiers: CATL, BYD, Li Auto, NIO, EVE Energy, Chery, and other leading vehicle/battery manufacturers

3. Electronic & Semiconductor High-End Adhesives (High-margin increment, domestic substitution main line)

1) Consumer electronics/communications: PCB conformal coating, power supply potting adhesive, mobile phone thermal gel, 5G base station sealing adhesive, supplying Huawei, ZTE, Apple
2) Optical modules/computing hardware: 800G/1.6T optical module underfill adhesive, lens fixing adhesive, CPO silicon photonics packaging materials, supporting Zhongji Innolight, Eoptolink
3) Advanced semiconductor packaging: Chip underfill adhesive, HBM thermal TIM gel, sintered silver, Chiplet supporting materials; introduced into JCET, Tongfu Microelectronics, Huatian three major packaging and testing factories, indirectly supplying NVIDIA computing chip supply chain

4. Industrial Packaging Adhesives (Stable traditional business)

Solvent-free polyurethane composite adhesive, boil-resistant food packaging adhesive, flexible packaging composite adhesive, serving food and daily chemical film packaging enterprises.

5. Other Specialty Adhesives

Rail transit, aerospace, engineering machinery sealing and bonding adhesives, military-related specialty organic silicone materials.

2. Upstream Supply Chain (Core raw materials + core suppliers)

1. Organic Silicone Segment (Core raw material for PV/electronic adhesives, major cost component)

- Core raw materials: Organic silicone DMC monomer, 107 base rubber, white carbon black, silane crosslinker, coupling agent
- Core suppliers: Lanzing Xinghuo Organic Silicone (long-term strategic contract, securing 260k tons of organic silicone capacity), Xianlin Technology (silane additives), Hoshine Silicon Industry, Xin'an Chemical

2. Polyurethane/Epoxy Adhesive Raw Materials (Automotive, packaging, structural adhesives)

- Raw materials: MDI/TDI isocyanate, polyol, epoxy resin, curing agent, calcium carbonate filler, flame retardant
- Suppliers: Wanhua Chemical, Dow, Nanya Epoxy Resin, Shandong Fengyuan Chemical

3. Lithium Battery Anode Adhesive Specialty Raw Materials

PAA polyacrylic acid monomer, SBR styrene-butadiene emulsion, additives, supported by domestic fine chemical enterprises.

4. Other Auxiliary Materials

Thermally conductive powder (alumina, aluminum nitride), defoamer, pigment, solvent, release film (backsheet raw material).

3. Downstream Supply Chain (Four core downstream tracks + leading end customers)

1. PV Industry Chain (Largest downstream)

Midstream module manufacturers (direct customers): LONGi Green Energy, Tongwei Co., Ltd., Trina Solar, Jinko Solar, JA Solar, DAS Energy
Supporting links: Silicon wafer, cell, inverter, energy storage PCS manufacturers

2. Power Battery & New Energy Vehicle Industry Chain

1) Battery enterprises (direct procurement of lithium battery adhesives): CATL, BYD Battery, EVE Energy, Sunwoda, Gotion High-tech
2) Vehicle manufacturers (body/electronic adhesives): BYD, Li Auto, NIO, XPeng, SAIC, Chery, JAC
3) Supporting: Charging pile, energy storage equipment manufacturers

3. Electronics, Computing, Semiconductor Industry Chain

1) Communication equipment: Huawei, ZTE (Tier 1 suppliers)
2) Optical module manufacturers: Zhongji Innolight, Eoptolink, Huagong Tech
3) Packaging and testing enterprises: JCET, Tongfu Microelectronics, Huatian Technology, Yuechin
4) End use: Servers, AI computing manufacturers, consumer electronics OEMs

4. Packaging and Printing Industry Chain

Flexible packaging enterprises, food daily chemical film processing plants, color printing composite plants

5. Traditional Industrial Downstream

Rail transit, engineering machinery, home appliances, aerospace supporting manufacturers

4. Core Characteristics of the Industry Chain

1. Upstream: Organic silicone raw material price fluctuations are the biggest cost variable; the company hedges risks through long-term contract price locking;
2. Midstream self-produced: Xiangyang, Yicheng, Changzhou, Guangzhou, Shanghai five production bases, supporting downstream leaders (Changzhou base directly serves CATL);
3. Downstream binding: Deeply bound to industry leaders in PV, lithium batteries, and electronics; high customer concentration, stable repurchase; high-end semiconductor adhesives are the core driver for import substitution, with significantly higher gross margins than traditional PV adhesives.
Future Performance Outlook (Short/Mid/Long Term, Growth Logic + Institutional Earnings Forecast + Core Risks)

1. Short Term (2026-2027): Steady recovery, lithium battery drives high growth, strongest performance certainty

1. Three major business growth drivers

(1) PV Adhesives (Basic business, performance safety net)

- Industry: Domestic PV industry de-involution, overcapacity easing; global installed capacity grows 15%+ annually; N-type, perovskite cells drive incremental demand for high-durability new adhesives; overseas Southeast Asia, Europe module factory orders continue to grow.
- Company: Global market share 45%-50% leader, ample 260k ton organic silicone capacity; 2026Q1 PV adhesive sales volume +14% YoY, revenue +7% YoY, volume growth offsets gross margin pressure from price wars; long-term contracts lock in upstream DMC raw materials, cost fluctuations controllable.
- Performance contribution: Revenue share about 40%, providing stable cash flow and base profit.

(2) Lithium Battery/New Energy Vehicle Adhesives (First growth engine, fastest growth)

- 2025 lithium battery business revenue doubled YoY, revenue share 15%; company clearly states 2026 lithium battery will be the fastest-growing segment, targeting 1 billion revenue.
- Capacity release: PAA anode adhesive existing 36k tons (18k tons put into operation 2026Q1), SBR 13k tons at full capacity; Dingyuan 75k ton lithium battery adhesive industrial park under continuous construction, capacity doubling by 2027.
- Customer barriers: Deeply bound to CATL, BYD, EVE Energy; PACK structural adhesive, hybrid adhesive, energy storage potting adhesive batch introduced; new energy vehicle body adhesive entered top 10 mainstream carmakers, 2025 vehicle adhesive sales +44%.
- Profitability: Lithium battery adhesive gross margin about 30%, significantly higher than PV adhesive, continuously improving overall company profitability.

(3) Electronic & Semiconductor Adhesives (High-margin increment, improving profit structure)

- 2025 electronic business revenue +28% YoY, gross margin 40%+, far exceeding PV and traditional packaging adhesives.
- Consumer electronics/optical modules: Thermal gel, UV adhesive supply to Huawei, ZTE, Zhongji Innolight; computing server, 800G optical module demand continues to expand.
- Semiconductor breakthrough (core flexibility point): Chip underfill adhesive, TIM thermal gel, IGBT silicone gel break overseas monopoly, batch introduced into JCET, Tongfu, Huatian three major packaging and testing factories; Guangzhou base dedicated semiconductor production line continuously ramping up, currently low revenue share but huge long-term potential.

2. Institutional consensus earnings forecast (As of June 2026, average of 7 institutions)

- 2026: Revenue about 5.2 billion yuan, net profit attributable to parent 310 million yuan, +40% YoY; EPS 0.55 yuan
- 2027: Revenue about 5.9 billion yuan, net profit attributable to parent 380-410 million yuan, +23%-32% YoY
- 2028: Revenue about 6.6 billion yuan, net profit attributable to parent 450-530 million yuan, +18%-30% YoY
- Quarterly characteristics: 2026 non-recurring growth significantly higher than net profit attributable to parent (Q1 non-recurring +15.9%), profit quality continuously optimized.

3. Short-term profit improvement logic

1. Product structure upgrade: High-margin lithium battery and electronic adhesive revenue share increases from 45% continuously, offsetting PV adhesive low-price competition;
2. Raw material stabilization: Organic silicone, MDI prices fluctuate at low levels, locked-in long-term contracts stabilize costs;
3. Scale effect: Xiangyang, Guangzhou, Dingyuan new bases put into operation, unit manufacturing costs decline;
4. Overseas expansion: Vietnam base layout, overseas revenue share steadily increases from 13%, avoiding domestic price wars.

2. Mid Term (2028-2030, 15th Five-Year Plan Period): Domestic substitution opens growth ceiling

1. Main line of high-end adhesive import substitution
Domestic high-end electronic, semiconductor, automotive structural adhesives 70% rely on Henkel, 3M, Wacker; policies promote new material independent controllability, Huitian as domestic leader continuously grabs market share. Semiconductor packaging adhesives, automotive-grade epoxy adhesives will become second profit curve.
2. New track incremental realization

- Perovskite PV: Supporting transparent encapsulation adhesive, adapting to next-generation PV technology;
- Semi-solid/solid-state batteries: Existing anode adhesive, thermal adhesive adapt to semi-solid, all-solid materials under parallel development, connecting with Tailan New Energy and other enterprises;
- Low-altitude economy, commercial aerospace aviation: Honeycomb filling, aerospace sealing adhesives under verification stage, long-term incremental space broad;
- Energy storage explosion: Large-scale energy storage PACK potting, thermal adhesive demand continuously expands.

3. Qualitative change in business structure
PV revenue share drops to below 30%, lithium battery + electronics + high-end automotive adhesives combined share exceeds 60%, performance breaks away from single PV cycle constraint, profitability stability greatly improved.

3. Long Term Core Growth Barriers (Supporting continuous performance delivery)

1. Sub-sector leader barrier
Global oligopoly in PV adhesives (only Huitian, Wacker, Dow); lithium battery anode adhesives, PCB electronic adhesives domestic first tier, customer certification cycle long, new entrants hard to replace.
2. Full industry chain support
Integrated capacity for organic silicone, polyurethane, lithium battery adhesives; upstream long-term contracts lock raw materials, costs better than peers; multiple bases close to downstream leaders (Changzhou serves CATL, Guangzhou serves electronics factories), delivery advantage obvious.
3. R&D and standard-setting voice
Leading over 40 national/industry adhesive standards, ample automotive-grade, semiconductor-grade material certification reserves, first-mover advantage in domestic substitution prominent.

4. Core Risks Suppressing Performance (Must be tracked with focus)

1. PV industry cycle fluctuation (Biggest risk)
PV module overcapacity and price wars will continuously suppress PV adhesive selling prices, dragging down overall gross margin; if installed capacity falls short, basic business revenue growth slows.
2. Sharp rise in upstream raw materials
DMC organic silicone, MDI, epoxy resin linked to crude oil; if commodities surge, locked-in price contracts cannot fully hedge, squeezing profits.
3. Expansion capital expenditure pressure
Lithium battery, semiconductor new bases continuously under construction; 2026Q1 asset-liability ratio 52.54%, financial expenses rise; if downstream demand falls short, capacity utilization decline will dilute profitability.
4. Customer concentration + accounts receivable risk
High customer concentration in PV and lithium batteries; end-2025 accounts receivable 2.23 billion yuan, 33% of total assets; deterioration in downstream module and battery factory cash flow may bring bad debt pressure.
5. High-end product verification falls short
Semiconductor, aerospace adhesive customer verification cycle long; if introduction pace slower than expected, high-margin incremental release delayed.

5. Summary: Overall Performance Outlook

1. Short term (2026-2027): Stable growth assured
PV underpins, lithium battery high growth, electronic adhesives gradually ramp up, net profit CAGR 30%-40%, gross margin continuously recovers, performance certainty strong.
2. Mid term (after 2028): Second growth curve realized
Semiconductor, energy storage, new energy vehicle lightweight adhesives ramp up, breaking away from single PV cycle, entering stable growth phase, profit growth maintaining 20%+.
3. Long term ceiling
Benefiting from new energy installed capacity + high-end material domestic substitution dual main lines, mid-to-long-term growth space ample; performance elasticity depends on mass production progress of semiconductor packaging adhesives, solid-state battery supporting materials.