\u3000\u3000 Farasis Energy (Gan Zhou) Co.Ltd(688567) (688567)
Event: the company released the performance forecast for 2021. It is estimated that the annual net profit attributable to the parent company will be – 800 to – 1.1 billion yuan, and the loss will increase by 141.69% to 232.32% year-on-year; The non net profit attributable to the parent deduction was – 1.1 to – 1.4 billion yuan, and the loss increased by 102.80% to 158.11% year-on-year.
Comments:
The company’s performance in 2021 is under pressure. The net profit attributable to the parent company in the single quarter of 2021q4 was – 380 million to – 680 million yuan, which was an expansion of the loss compared with the net profit attributable to the parent company of -194 million yuan in the single quarter of 2021q3. The pressure on the company’s overall performance in 2021 is mainly due to 1) the low price of the company’s products; 2) Price rise of main raw materials; 3) Fixed assets have increased, and the scale effect has not been fully shown yet; 4) Withdrawing asset impairment loss; 5) The amortization of equity incentive expenses increased and R & D investment increased.
In the future, it is expected to turn losses into profits through large-scale effect and price increase of battery products. From the perspective of production and marketing, with the large volume of Daimler and Geely, the company’s downstream major customers, it is expected to reduce costs through large-scale. In terms of product price, battery enterprises are expected to reasonably transmit the rising pressure of raw material prices through price increases in 2022. With the scale effect and the price rise of battery products, the company is expected to turn losses into profits.
Binding key customers is expected to achieve leapfrog development. In 2018, the company signed a long-term cooperation agreement with Daimler and realized mass supply in 2021; In December 2020, the company signed the strategic cooperation agreement with Geely technology, and Farasis Energy (Gan Zhou) Co.Ltd(688567) it is estimated that the total production capacity of the joint venture and the company will reach 120gwh in the future, of which the construction will be started in 2021 will not be less than 20gwh. With the company’s core customers Daimler and GAC gradually entering the large-scale period, it is expected to achieve leapfrog development.
Profit forecast and investment rating: we expect the company’s revenue from 2021 to 2023 to be 3.034 billion yuan, 11.825 billion yuan and 17.363 billion yuan respectively, with a year-on-year increase of 171.0%, 289.7% and 46.8%; The net profit attributable to the parent company was -972 million, 107 million and 1.123 billion yuan respectively, with a year-on-year increase of – 193.7%, 111.0% and 946.5%. The current share price corresponds to PE of 307.74 and 29.37 from 2022 to 2023 respectively, maintaining the “buy” rating.
Risk factors: product sales are less than expected, capacity expansion is less than expected, product yield is less than expected, and raw material prices rise more than expected.
