Dongwu Securities: Initiates Coverage on Minsda with Buy Rating

Soochow Securities Co., Ltd. Zhu Jieyu, Yi Shenshen, Yu Huiyong, Wu Alang, and Chen Zhexiao recently conducted research on Minshida and published the research report “2025 Annual Report Review: Strong Multi-Field Transformer Demand Continues to Drive Revenue and Profit Growth,” giving Minshida a “Buy” rating.

Minshida (920394)

Investment Highlights

Revenue and profit are expected to grow simultaneously in 2025, with steady improvement in profitability. In 2025, the company is projected to achieve revenue of 445 million yuan, up 9.16% year-over-year; net profit attributable to shareholders of 127 million yuan, up 26.70%; and non-recurring net profit of 108 million yuan, up 17.37%. The full-year gross profit margin is 40.24%, an increase of 2.75 percentage points year-over-year; net profit margin is 28.60%, up 3.96 percentage points. This is mainly driven by the rapid development in global power transformers, AI computing data centers, new energy sectors, which sustain high transformer demand, significantly boosting the consumption of aramid insulation paper. The growth in sales volume and reduced production costs jointly contribute to revenue and profit increases; lower raw material procurement costs from suppliers also positively impact gross profit margins. On the expense side, selling expense ratio is 3.12%, up 0.29 percentage points year-over-year due to amortization of new materials insurance and marketing team development; management expense ratio is 3.11%, slightly down 0.34 percentage points, reflecting improved management efficiency; financial expense ratio is -0.76%, slightly higher than last year, mainly due to decreased exchange gains.

Aramid paper remains the core main business, accounting for over 95% of revenue, with composite materials growing rapidly by 117% year-over-year.

Segment-wise, 1) Aramid paper, as the company’s core business, is expected to generate revenue of 424 million yuan in 2025, up 6.68%; gross profit margin of 42.22%, up 3.28 percentage points. It still accounts for over 95% of total revenue, mainly driven by the booming demand in global power transformers, AI data centers, and new energy sectors, which significantly boosts aramid insulation paper consumption. 2) The composite materials business performed impressively, with revenue of 21.21 million yuan, a sharp increase of 116.58%, and its revenue share rising to 4.76%. Gross profit margin increased by 19.70 percentage points year-over-year to 0.87%, mainly due to the company’s focus on the new energy vehicle drive motors and transformers, strengthening cooperation with leading motor and vehicle manufacturers, and offering multiple product varieties and specifications to meet diverse customer needs; in transformers, the company promotes self-developed new specifications to replace non-composite materials and enhances cooperation with some end customers.

High industry prosperity for aramid paper, with domestic substitution and downstream capacity expansion opening growth space.

1. Industry high prosperity: As a high-performance composite material, aramid paper, with excellent high-temperature resistance, flame retardancy, and insulation properties, is widely used in aerospace, electrical power, new energy vehicles, 5G communications, and rail transit. Increasing demand in emerging downstream fields is the core growth driver. 2) Strong product innovation capability: Since its establishment in 2009, the company has deeply cultivated the aramid paper field, breaking the US DuPont’s global monopoly, making China the second country capable of producing aramid paper. After more than ten years of development, it has become a leading domestic aramid paper manufacturer and the largest in scale in China. 3) Excellent customer resources: Through years of continuous development, the company’s market recognition and brand awareness have steadily increased. Major direct or end customers include AVIC Group, CRRC, Swiss ABB, German Siemens, German Sefri, French Schneider, Panasonic, and other well-known domestic and international enterprises.

Profit forecast and investment rating: As a leading company in China’s aramid paper industry, the company benefits continuously from accelerated domestic substitution of aramid paper and expanding demand in downstream emerging fields. We revise the company’s net profit attributable to shareholders forecast for 2026–2028 to 165 million, 219 million, and 296 million yuan (previous estimates for 2026–2027 were 150 million and 174 million yuan), corresponding to latest P/E ratios of 40x, 30x, and 22x, maintaining a “Buy” rating.

Risk tips: 1) Technology iteration falling short of expectations; 2) Macroeconomic fluctuations; 3) Intensified market competition.

The above content is compiled by Securities Star based on publicly available information, generated by AI algorithms (Network Credit Code 310104345710301240019), and does not constitute investment advice.