\u3000\u3000 Fangda Carbon New Material Co.Ltd(600516) (600516)
The company is a leading enterprise of graphite electrode in China. In 2020, the company’s graphite electrode products accounted for 23.39% in China. With the 50000 ton carbon relocation project in Hefei, the 50000 ton new project in Meishan Fangda and the 25000 ton relocation project in Chengdu Rongguang, the production capacity of the company’s graphite electrode is expected to reach 300000 tons, and the leading position will be more stable.
“Double carbon” has opened up the demand space, and the tightening of capacity approval has boosted the long-term high outlook of the graphite electrode industry. The CO2 emission per ton of electric furnace steelmaking is only about 0.5 tons, less than 1 / 4 of that of blast furnace steelmaking. In order to effectively reduce the carbon emission of the iron and steel industry, policies encourage the proportion of electric furnace steel to increase. At the end of the 14th five year plan, the proportion of electric furnace steel output in crude steel output is expected to reach 20%. It is expected that the compound growth rate of graphite electrode consumption in electric furnace steelmaking from 2021 to 2025 will be 18.48%, and the demand space of the industry is broad. Graphite electrode itself is a high energy consuming industry. Affected by policies such as dual control of energy consumption, some provinces and cities have issued policies to restrict the approval of medium and low-end production capacity. The inflection point of the industry has gradually emerged, and the price of graphite electrode is expected to rise for a long time.
The production capacity of ultra-high power graphite electrode is put into centralized production, and the performance release is just around the corner. The 125000 ton ultra-high power graphite electrode project in Hefei carbon, Meishan Fangda and Chengdu Rongguang will be put into operation in 2022. The proportion of ultra-high power graphite electrode of the company is expected to reach 67.3% in 2025, and the product structure will be further optimized. In 2020, the company sold 67200 tons of ultra-high power graphite electrodes, accounting for 21.65% of the Chinese market. With the gradual production of ultra-high power graphite electrode projects, the company has a stronger voice in the high-end graphite electrode market.
The special graphite project has gradually increased in large quantities, fully benefiting from the accelerated development of downstream photovoltaic and other industries. The subsidiary Chengdu carbon plans a total of 30000 tons of special graphite project. The phase I 10000 tons production line has been put into operation, and the remaining capacity will be gradually completed and put into operation. It is expected that the company’s isostatic graphite output is expected to reach 27000 tons in 2025, with a compound growth rate of 25% from 2021 to 2025. Benefiting from the accelerated development of downstream photovoltaic Cecep Solar Energy Co.Ltd(000591) , semiconductor, nuclear engineering and other industries, the market demand for isostatic graphite is expected to grow rapidly in the future. We believe that with the large-scale production of Chengdu carbon special graphite project, the contribution of special graphite to the company’s performance will increase steadily.
Integrate the raw material production capacity upward, integrate the layout, and effectively iron the risk of raw material price fluctuation. The price of needle coke and petroleum coke, the main raw materials of graphite electrode, fluctuates greatly. In order to effectively iron the price risk of upstream raw materials, the company has continuously arranged the raw material industry chain in recent years. Fushun Fangda has a production capacity of 200000 tons of calcined coke, fangdaxi Kemo has a production capacity of 60000 tons of needle coke, and Jiangsu Fangda has a production capacity of 300000 tons of soft asphalt. According to the conversion of the production capacity of needle coke and petroleum coke, the self-sufficiency rate of raw materials of the company will exceed 60% in 2020. The company’s carbon product manufacturers and raw material enterprises have gradually formed an industrial pattern of resource sharing and complementary advantages. The integration is expected to further improve the stability of the company’s performance.
Investment suggestion: the company is the leader of graphite electrode in China, and many projects under construction will release production capacity in 2022. Under the background of “double carbon”, the State encourages the development of electric furnace steelmaking, the approval and construction of superimposed graphite electrode capacity is limited, the industry fundamentals are about to turn an inflection point, and the price of graphite electrode is expected to rise for a long time. We predict that the net profit attributable to the parent company from 2021 to 2023 will be RMB 1.160 billion, RMB 1.600 billion and RMB 2.221 billion respectively, and the earnings per share will be RMB 0.30, RMB 0.42 and RMB 0.58 respectively. It will be covered for the first time and the company will be rated as “recommended”.
Risk warning: the development of electric furnace steelmaking is not as expected; The company’s graphite electrode production capacity was lower than expected; The price of raw materials fluctuated sharply.
