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Wednesday, June 30, 2021 1:24:42 PM

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Eontec production

Yian Technology (300328.SZ)
R&D and upgrade-magnesium aluminum alloy, liquid metal, and medical magnesium materials work together
Securities Research Report | First Coverage Report May 26, 2021
Core Aspects:
Industry leader in the fields of magnesium aluminum alloy, liquid metal, and medical magnesium materials. The company has a complete magnesium-aluminum alloy industry chain, based on its main business, has a position in the fields of liquid metal and medical magnesium materials, and builds a new growth point for the company. Its subsidiaries Yihao Metal and Meian Medical are the company’s "main battlefields" for liquid metal and medical magnesium materials.
Liquid metal will bring about the third material industrial revolution, and the company masters formulas and core patents for die-casting. Liquid metal (also known as amorphous alloy) has excellent physical and chemical properties such as high strength, high hardness, wear resistance, and corrosion resistance. With the advancement of die-casting technology, it currently has the potential for mass production and has the ability to form complex structures at one time. The cost efficiency advantage is significant. The company holds the core patents of liquid metal formulas and process equipment. LQMT (United States), a subsidiary of Hong Kong Liquid Metal Co., Ltd., which is 100% owned by the chairman, has played a synergistic role with the company to consolidate the company's leading position in Liquid Metal. The zirconium-based liquid metal material has been officially selected as an important material for the hinge of Huawei's second-generation folding screen mobile phone Mate Xs. With the promotion of zirconium-based metal applications, the company's product market has a broad space.
Biodegradable medical magnesium alloys benefit orthopedic patients, and the clinical and industrialization process is advancing steadily. Magnesium is a major element of the human body, which can be degraded and absorbed after implanted in the human body, avoiding the pain and risk of secondary surgery, and its mechanical properties are close to that of human bone tissue; and magnesium ions can promote bone formation and accelerate the rate of bone formation, and the cost is lower than traditional titanium alloys Material, so it has obvious advantages in orthopedics applications. The company's domestic clinical trials of high-purity magnesium bone nails are steadily advancing, and they have successfully obtained the EU CE certification and the right to enter the EU market. In the future, they will open up a tens of billions of blue ocean market.
Hold (first time)
Stock information
Industry Industrial Metal
Closing price on May 25 (yuan) Total market value (million yuan) Total share capital (million shares) Of which free float (%)
30-day average daily trading volume (million shares)
6.33 4,370.38 690.42 98.61 5.18
CSI 300
Stock price trend
64% 48% 32% 16%
0% -16% -32% -48%
Yian Technology
New energy vehicles accelerate the process of lightweight vehicles, and join hands with Yunhai Metal to create an aluminum-magnesium alloy “Yangtze River Delta + Pearl River Delta” layout. Magnesium aluminum alloy is a lightweight structural material for automobiles. At present, new energy vehicles generally have problems such as overweight and short cruising range. Increasing the proportion of lightweight materials in the entire vehicle is an effective way to increase the cruising range of new energy vehicles. The development of the new energy vehicle industry, The introduction of national policies such as environmental protection will accelerate the process of automobile lightweighting. In 2020, the second phase of the company’s “Chaohu Yi’an Yunhai Light Alloy Precision Die Casting Production Base Project” will be completed (the first phase will be put into production in 2017), achieving stable supply of raw materials and the location advantage of the “Pearl River Delta + Yangtze River Delta” dual center layout. Enter the supply chain of well-known domestic and foreign customers such as BYD and Tesla.
Investment advice: The company’s liquid alloy masters the core formula and equipment patents, and the zirconium-based liquid metal cuts into the core mobile phone manufacturer’s supply chain. It is expected to open up the company’s business profit growth point; on the other hand, the company’s new energy vehicle light
We have accumulated rich experience and R&D advantages in quantitative materials, and our products have successfully entered the supply chain of well-known customers at home and abroad, and are expected to enjoy incremental market gains in the future. The company has accumulated and first-in-class advantages in the industrialization of medical magnesium alloys, and the industrial value of magnesium alloys is expected to be realized after the clinical promotion of medical magnesium alloys. We expect the company’s net profit attributable to the parent company to be 0.41, 0.55, and 74 million yuan in 2021-2023, corresponding to 107.4, 80.0, and 59.1 times of PE. Considering that the company’s current business is still in the early promotion stage, there is still uncertainty in subsequent performance growth. The first coverage is given a "hold" rating.
Risk warning: orders for related new materials are lower than expected; the industrialization of liquid metal is not as expected; the performance of the main business of magnesium and aluminum alloy is not as good as expected; the clinical application of medical magnesium alloy is slower than expected.
Author
2020-05 2020-09 2021-01
2021-05
Analyst Wang Qi
Practicing Certificate Number: S0680521030003 Email: wangqi3538@gszq.com Research Assistant Liu Simeng Email: liusimeng@gszq.com
Related research
Financial indicators 2019A 2020A Operating income (million yuan) 1,025 945 Growth rate yoy (%) 4.0 -7.8 Net profit attributable to parent (million yuan) 103 16 Growth rate yoy (%) 90.2 -84.3 EPS latest dilution (yuan/share) 0.15 0.02 Return on net assets (%) 5.8 1.2 P/E (times) 45.7 290.4 P/B (times) 3.6 3.6
2021E 2022E 2023E
1,188 1,524 1,905 25.6 28.3 25.0 41 55 74 151.5 34.2 35.4 0.06 0.08 0.11 3.0 3.9 5.1 107.4 80.0 59.1 3.6 3.5 3.4
Source: Wind, Guosheng Securities Research Institute
Note: The stock price is the closing price on May 25, 2021. Please read the statement on the last page of this report carefully

May 26, 2021
Financial statements and key financial ratios
Balance sheet (million yuan)
Fiscal year 2019A 2020A 2021E 2022E 2023E
Income statement (million yuan) Accounting year operating income
Operating costs Operating taxes and additional operating expenses
Management costs
R&D expenses
Financial expenses
Asset impairment loss
Other income
Gains from changes in fair value
Net investment income
Asset disposal income
operating profit
Non-operating income
Operating expenses
The total profit
Income tax
Net profit
Minority shareholder gains and losses
Net profit attributable to the parent company
EBITDA EPS (yuan/share)
Main financial ratio
Fiscal year
Growth capacity Operating income (%) Operating profit (%) Net profit attributable to the parent company (%) Profitability
Quick ratio
Operating capacity
2019A 2020A 2021E 2022E 2023E
1025 945 1188 1524 1905 809 748 933 1190 1486 7 6 9 11 14 59 37 44 55 67 83 85 101 125 150 57 71 59 76 95
2 5 14 27 47 -8 -11 3 2 -8
9 12 0 0 0
0 0 0 0 0
2 1 1 1 1 36 -1 0 0 0 46 -11 26 39 55 52 30 24 28 33 0 1 1 1 0 97 19 49 66 88 12 1 5 6 8 85 18 44 59 80 -19 1 3 5 6 103 16 41 55 74 162 94 133 181 229 0.15 0.02 0.06 0.08 0.11
2019A 2020A 2021E 2022E 2023E
4.0 -7.8 25.6 28.3 25.0 16.5 -123.9 337.6 49.2 42.8 90.2 -84.3 151.5 34.2 35.4
21.1 20.8 21.5 21.9 22.0 10.1 1.7 3.4 3.6 3.9 5.8 1.2 3.0 3.9 5.1 5.3 1.2 2.6 3.5 4.2
28.0 30.2 41.8 47.8 56.3 -4.1 -1.1 18.5 32.3 53.2 2.22.21.51.31.1
Current assets 1019 Cash 329 Notes and accounts receivable 321 Other receivables 84 Prepayments 6 Inventories 210 Other current assets 69 Non-current assets 1011 Long-term investments 0 Fixed assets 622 Intangible assets 40 Other non-current assets 349 Total assets 2031 Current liabilities 474 Short-term borrowings 108 Notes and accounts payable 228 Other current liabilities 139 Non-current liabilities 94 Long-term borrowings 56 Other non-current liabilities 38 Total liabilities 568 Minority shareholders' equity 147 Share capital 460 Capital reserves 462 Retained earnings 390 Attributable to shareholders' equity of the parent company 1316 Liabilities and shareholders' equity 2031
Cash flow statement (million yuan)
Fiscal Year 2019A
Cash flow from operating activities 108
Net profit 85
Depreciation and amortization 65
Financial expenses 2 Investment loss -2-1-1-1-1 current ratio
977 1323 1491 364 353 453 329 488 560 46 117 92
8 10 13 165 290 308 65 65 65 1112 1246 1424 23 45 68 743 856 1013 48 49 50 298 295 294 2089 2568 2915 435 888 1187 136 447 740 213 336 365 86 104 82 196 186 205 93 97 110 103 89 94 632 1074 1392 166 170 174 690 690 690 232 232 232 369 396 432 1291 1325 1348 2089 2568 2915
1996
566
750
169
16
431
65
1627
90
1185
48
304
3624
1817
1182
510
125
223
127
95
2039
181
690
232
480
1403
3624
2020A 2021E 2022E
2023E
Gross profit margin (%) Net profit margin (%) ROE(%) ROIC(%)
Working capital changes
Other operating cash flow
Cash flow from investing activities
Capital expenditures
Long-term investment
Other investment cash flow
Cash flow from financing activities
short-term loan
Long term loan
Increase in common stock
Increase in capital reserve
Other financing cash flow
Net increase in cash
-32 96 -10 13 -129 -173 196 157 -20 -60 47 -76 -4 15 -22 28 -37 37
0 230 0 -230 55 -51 -25 41
-196 -65 -210 0 0 0 -209 -269 -302 112 156 181 -23 -23 -23 -120 -136 -144 -65 -34 -45 -14 2 -2
4 13 17
0 0 0
0 0 0 -55 -50 -60 -337 -191 -330
1.6
0.15
P/E 45.7 P/B 3.6 EV/EBITDA 29.6
1.7 1.1 0.9 0.8
0.5 0.5 0.6 0.6 2.9 2.9 2.9 2.9 3.4 3.4 3.4 3.4
0.02 0.06 0.08 0.11 0.30 -0.09 0.16 0.02 1.87 1.92 1.95 2.03
290.4 107.4 80.0 59.1 3.6 3.6 3.5 3.4 51.5 38.7 29.5 24.9
205 -63 112 18 44 59 73 76 92 5 14 27
17
80 Solvency
100 Gearing ratio (%) 47 Net gearing ratio (%)
Turnover rate of total assets
Accounts receivable turnover rate
Accounts payable turnover rate
Index per share (yuan) Earnings per share (latest dilution) Operating cash flow per share (latest dilution) 0.16 Net assets per share (latest dilution) 1.91 Valuation ratio
0.5 2.8 3.2
Source: Wind, Guosheng Securities Research Institute
Note: The stock price is the closing price on May 25, 2021
P.2
Please read the statement on the last page of this report carefully

Content directory
1. Yian Technology: Industry leader in the fields of magnesium aluminum alloy, liquid metal, and medical magnesium materials............................. ................................................5 1.1 The company is a pioneer & leader in the global large-scale magnesium-aluminum alloy die-casting industry... .................................................. ...5 1.2 Yi'an Technology's core competitiveness-technology research and development and industrial integration work together............................... .................................................. ...7 1.3 The three major business segments go hand in hand and continue to improve the industrial chain layout........................ .................................................. .........7 1.4 Operating income has declined for the first time since its listing, and the volume of liquid metal has risen sharply......................... .................................................. ................8
2. Liquid metal will bring about the third material industrial revolution... .................................................. ........................10 2.1 Liquid metal has the potential to replace traditional alloys, and the company continues to expand downstream applications.......... .................................................. .........10 2.2 Liquid metal folding screen hinges open new market space............................. .................................................. .......................12 2.3 The production of bulk amorphous alloys is relatively difficult, and large-scale bulk amorphous alloys still need technological breakthroughs...... .................................................. 13 2.4 The company's amorphous alloy is in a leading position in China........................ .................................................. ............14
3. Biodegradable medical magnesium alloys benefit orthopedic patients... .................................................. ...18 3.1 Biodegradable medical magnesium alloys have obvious advantages in orthopedic applications... .................................................. ...18 3.1.1 Compared with traditional titanium alloys, stainless steel and other alloy materials, magnesium alloys have significant advantages... .................................................. ...18 3.1.2 High purity magnesium VS magnesium alloy: single element, stable degradation rate ... .................................................. .........19 3.2 The successful clinical trials of medical magnesium bone nails will open up the tens of billions of medical equipment market...... .................................................. ...19 IV. New energy vehicles support the magnesium-aluminum light alloy business sector............................... .................................................. .................................. 21 4.1 Lightweight cars open up the market space of magnesium-aluminum alloys, and new energy vehicles are expected Accelerate the lightweight process................................... 21 4.2 Yi'an Yunhai Project is completed, "Realizing the Yangtze River Delta + Pearl River Delta" layout....... .................................................. ...23 V. Earnings Forecast and Investment Recommendations... ..................................... .................................................. ...24 5.1 Earnings forecast assumptions........ .................................................. .................................................. ..................... 25 5.2 Investment advice......................... .................................................. .................................................. .........26 Risk Warning.......................... .................................................. .................................................. ................................ 26
Chart catalog
Chart 1: The company has a wide range of downstream applications... .................................................. .........5 Chart 2: Zhuzhou Municipal People's Government State-owned Assets Supervision and Administration Commission is appropriate Ann Technology Real Holdings East................................... ..........................6 Chart 3: Based on magnesium-aluminum alloy die-casting as its main business, it will use liquid metal and medical magnesium materials to build new growth .................................................. ...7 Chart 4: The company's operating income has declined (100 million yuan) .......... .................................................. ............................8 Exhibit 5: 2020 The company's net profit attributable to its parent has dropped sharply (100 million yuan) ... .................................................. .....8 Chart 6: The company's liquid metal revenue accounts for about 13% (%) of the company's revenue ........... .................................................. ...9 Chart 7: Liquid metal receivables increase rapidly (million yuan)............. .................................................. ................................................9 Chart 8: In 2020, the company's liquid metal will contribute 33% of gross profit (%) ... .................................................. ..........9 Figure Table 9: The company's R&D investment continues to increase (ten thousand yuan)...................................... .................................................. ........................10 Figure 10: R&D expenses as a proportion of operating income have risen steadily (100 million yuan) ........ .................................................. ..........10 Chart 11: Domestic and overseas revenue share (%) .. .................................................. .................................................. ...10 Exhibit 12: The gross profit margin of overseas business in 2020 is lower than domestic (%)... .................................................. .....10 Chart 13: Liquid metal mechanical properties are better than common materials... .................................................. .................................................. ........11 Figure 14: A wide range of applications for liquid metals............ .................................................. ........................................12 Figure 15: Huawei Mate Xs triggers a folding screen Mobile phone blowout... .................................................. 12 Chart 16: Smartphone shipments enter the platform period (100 million units) ... ............ .................................................. .......13 Chart 17: Folding screen mobile phone market has entered a period of rapid growth (US$100 million).......................... .................................................. ...........13 Chart 18: Bulk amorphous alloy production process............................ .................................................. .............................................14 Chart 19: Appropriate Antech's strategic layout of liquid metal............................................ .................................................. .......................16
May 26, 2021
P.3 Please read the statement on the last page of this report carefully

May 26, 2021
Figure 20: The company is actively deploying liquid metal formulas and process equipment patents...... .................................................. ...16
Chart 21: Vacuum Die Casting Patent... .................................................. ..................................... 17
Chart 22: Continuous Rotary Die-casting Molding Equipment... .................................................. ...............................17
Figure 23: Estimated production capacity of the industrialization expansion project of amorphous alloy precision structure construction... .................................................. .....17
Chart 24: Magnesium is close to the mechanical properties of human bone tissue... .................................................. ........................19
Figure 25: The first case of pure magnesium bone nail applied to femoral necrosis with vascularized bone flap transplantation.............................. .................................................. ...19
Chart 26: Common joint fractures........................................... .................................................. ........................................19
Figure 27: 99.999 high-purity magnesium bone nail........................................... .................................................. ....................................20
Figure 28: Market scale of trauma physiotherapy consumables field (100 million yuan) ... .................................................. .................20
Figure 29: The proportion of my country's aging population continues to rise (million people) ................................... .................................................. ...............20
Figure 30: The amount of magnesium used in domestic bicycles still has a lot of room for growth... .................................................. .....................twenty one
Figure 31: Magnesium alloy has the advantages of light weight and high density............ .................................................. ......................twenty one
Figure 32: The amount of aluminum used by bicycles in my country (kg) is lower than the level of foreign companies... .................................................. ..................twenty two
Chart 33: The amount of magnesium used in bicycles in my country (kg) is lower than the level of foreign companies... .................................................. ..................twenty two
Figure 34: my country's new energy vehicle sales and growth rate (10,000 units) ... .................................................. ......................twenty two
Chart 35: The company's magnesium-aluminum alloy equipment... .................................................. ................................twenty three
Figure 36: The company's auto parts products... .................................................. ..................................... twenty three
Figure 37: Yi'an Yunhai Light Alloy Precision Die Casting Production Base Project Estimated Capacity ... .................................................. ..twenty four
Figure 38: Forecast of company profit and main cost subjects (100 million yuan) ........................... .................................................. ..............25
Exhibit 39: Valuation Table of Comparable Companies... .................................................. .........................................26
P.4 Please read the statement on the last page of this report carefully

Chart 1: The company has a wide range of downstream applications
1. Yian Technology: Industry leader in the fields of magnesium aluminum alloy, liquid metal, and medical magnesium materials
1.1 The company is a pioneer & leader in the global large-scale magnesium-aluminum alloy die-casting industry
The company is one of the earliest companies in the world to deploy large-scale magnesium-aluminum alloy die-casting equipment, and has a complete industry chain of magnesium-aluminum alloy research and development, design, production and sales. On the other hand, the company's card slots are deployed in the fields of liquid metal and medical magnesium materials, building a new growth point for the company. Yian Technology was established in May 1993, specializing in the research and development, design, production and sales of magnesium alloy, aluminum alloy and other light alloy precision die castings, mainly used in 3C, LED, medical equipment, auto parts, power tools, Industrial accessories and other fields. On the basis of the original business scale, the company currently focuses on the development trend of new material industries such as liquid metal, biodegradable medical magnesium alloy, new energy vehicles, 5G, etc., intensifies scientific and technological research and development, and actively expands the layout of new products and new businesses. , To achieve a systematic combination of technology and products to enhance the company’s endogenous growth momentum; the company’s liquid metal products have successfully entered Huawei’s supply chain system; medical magnesium bone nails have begun domestic clinical trials and are expected to gradually begin market launch.
May 26, 2021
Source: Yi'an Technology Company's official website, Guosheng Securities Research Institute
P.5
Please read the statement on the last page of this report carefully
The legal representative of the company is Yang Jiedan, the actual controller is the State-owned Assets Supervision and Administration Commission of Zhuzhou Municipal People’s Government (Zhuzhou State-owned Assets Supervision and Administration Commission), and the controlling shareholder is Zhuzhou State-owned Assets Holding Group Co., Ltd. Public offering of 50 million shares, after the transfer of 78.75 million shares of the company held by Yian Industrial, the accumulated shareholding ratio of the company is 27.97%. The second largest shareholder is Hong Kong Yian Industrial Co., Ltd., with a shareholding ratio of 20.41%. Founded in 1984, the legal representative is Li Yangde, the current chairman of Yian Technology.
Zhuzhou International Investment Corporation was established in January 2010. Its business scope is investment and operation of state-owned assets; investment and operation of urban infrastructure and rural infrastructure construction. It actively develops key projects around Zhuzhou’s "four cities and three bases" and 100 billion industrial clusters. Equity investment, etc. Up to now, there are 35 invested companies, including 7 wholly-owned subsidiaries. Inion Technology can take advantage of Zhuzhou SDIC's holdings to promote the manufacturing industry of Zhuzhou SDIC and the company's liquid metal and new energy vehicle lightweight metal production.
Manufacturing technology is better integrated.

May 26, 2021
Subsidiaries: Yi'an Technology has 18 domestic holding subsidiaries for scientific research, processing, production, and sales. Among them, Chaohu Yi'an Yunhai cooperates with the parent company to further deepen the use of magnesium aluminum alloy lightweight materials for automobiles; Yihao Metal and Mei'an Medical are the companies The "main battlefield" for liquid metal and medical magnesium materials: (1) Yihao Metal Material Technology Co., Ltd. (60% shareholding): Mainly eng