\u3000\u3000 Fangda Carbon New Material Co.Ltd(600516) (600516)
Leading enterprises in graphite electrode industry are significant beneficiaries from controlling energy consumption to carbon emission. At the central economic work conference held on December 10, 2021, it was clearly pointed out that “create conditions to realize the transformation from dual control of energy consumption to dual control of total carbon emission and intensity as soon as possible”. In the process of controlling energy consumption in 2021, the capacity utilization rate of electric furnace steel is nearly halved, but the power consumption per ton of steel in short process (electric furnace steel) and long process (blast furnace converter steel) is high and the carbon emission is low, which is expected to benefit significantly in the process of controlling carbon emission in the future. Graphite electrode is mainly used in electric furnace steel smelting, and the unit consumption per ton of electric furnace steel is only 2kg, so it is one of the few subdivided industries that benefit from controlling energy consumption and carbon emission.
The competitiveness of short process steelmaking is expected to catch up with that of ultra long process steelmaking, which will significantly increase the demand for graphite electrodes. For a long time, the cost of electric furnace steel in China has been about 300 yuan / ton higher than that of converter steel, but electric furnace steelmaking is about to usher in the opportunity of flat cost or even better: (1) according to the data on December 31, 2021, the carbon prices of China, the European Union and South Korea are 9, 91 and 29 dollars / ton respectively. In the future, if China’s CO2 price rises to 25 dollars / ton and steel is included in the national carbon trading market, it will make the short The cost difference of long process steelmaking narrowed by 254 yuan / ton; (2) The amount of depreciated scrap steel in China is becoming more and more abundant, which will make the price of scrap steel (the main cost of electric furnace steel) narrower than that of pig iron; (3) The peak valley electricity price difference policy will also reduce the cost of short process steelmaking by 100 yuan / ton. Under the limit level, assuming that scrap steel will be mainly used in electric furnace smelting in 2025, the proportion of scrap steel in electric furnace will reach 100%, and the demand for graphite electrode in iron and steel industry is expected to rise to 885000 tons, an increase of 169% compared with the level in 2021.
The supply elasticity of graphite electrode is weak, which is easy to cause the mismatch between supply and demand. The production process of graphite electrode is long, and the cost accounts for less than 2.5% in the downstream. The small supply elasticity is easy to cause the price to soar. At present, the supply elasticity of graphite electrode industry is restricted by three factors: (1) affected by the factors of environmental protection and production restriction, the utilization rate of some enterprises’ production capacity (corresponding to 840000 tons in 2021) is below 30% for a long time; (2) Graphite electrode belongs to the “two high” project. During the “14th five year plan” period, the production of enterprises with low capacity utilization and the investment of new capacity in the industry are expected to be further limited, and it is expected to improve the concentration of leading enterprises and reshape the supply pattern of the industry without new capacity; (3) If there is a long-term shortage of negative electrode graphitization, it is expected that about 300000 tons of graphite electrode capacity will be converted to negative electrode materials. Assumptions: a. the scrap ratio of electric furnace will reach 100% in 2025; b. The capacity utilization rate of 16 large graphite electrode enterprises needs to reach 100%; c. When the utilization rate of surplus capacity reaches 52% (under the limit level), the supply-demand gap of graphite electrode industry will reach 6.87%.
The company’s graphite electrode capacity continues to release, and the carbon new material business has been dormant for a long time. (1) From 2021 to 2022, the company’s graphite electrode capacity (consolidated statement caliber) continued to be put into operation, driving the recovery of performance; (2) From 2021 to 2023, the production capacity of 30000 tons of carbon and special graphite in Chengdu will be put into operation gradually, which will contribute to the net profit. In addition, the company has been laying out cathode materials, graphene and carbon fiber for a long time, and will further carry out the business of carbon composite materials and silicon carbon cathode materials. With the production of these new materials, it is expected to further thicken the company’s performance.
Profit forecast, valuation and rating: as a leading enterprise in the graphite electrode industry, the company has both carbon new material business and provides new driving force for future development. It is estimated that the net profit attributable to the parent company from 2021 to 2023 will be 1.184 billion yuan, 1.780 billion yuan and 2.606 billion yuan respectively, and the corresponding EPS will be 0.31, 0.47 and 0.68 yuan respectively. Combined with absolute relative valuation, considering the leading position of the company and the development expectation of new business, the company will be covered for the first time and given a “buy” rating.
Risk tip: the development space of photovoltaic industry, new energy vehicle industry and nuclear power industry is less than expected; The production capacity of graphite electrode industry, negative electrode materials, carbon carbon composites and other products continues to be excessive, and the excess supply leads to the decline of profitability; China Fangda Group Co.Ltd(000055) issue deliverable bonds with the company’s shares as the subject, and the large-scale conversion of shares in the future will affect the performance of the company’s share price.
