Zhejiang Huayou Cobalt Co.Ltd(603799) (603799)
Event: on December 2, the company announced that it had signed a strategic cooperation agreement with Farasis Energy (Gan Zhou) Co.Ltd(688567) , which agreed on the procurement and cooperation of ternary precursors, the recycling of waste and used batteries, and the development, application and exchange of ternary positive electrodes and ternary precursors. According to the agreement, a total of 161500 tons of Farasis Energy (Gan Zhou) Co.Ltd(688567) ternary precursors are planned to be supplied from December 2021 to 2025.
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Orders for precursors continue, and the advantages of lithium battery integration continue to highlight: the company announced the signing of strategic cooperation agreements with Ningbo Ronbay New Energy Technology Co.Ltd(688005) and Beijing Easpring Material Technology Co.Ltd(300073) on November 20 and November 30, respectively, and agreed to purchase three yuan precursors from Zhejiang Huayou Cobalt Co.Ltd(603799) not less than 180000 tons and 300000-350000 tons from Zhejiang Huayou Cobalt Co.Ltd(603799) from 2022 to 2025. Zhejiang Huayou Cobalt Co.Ltd(603799) high nickel product quality and the advantageous position of lithium battery integration have been continuously recognized in the industry.
The capacity of the remaining ternary precursors is basically locked: according to the recently signed agreement, From 2022 to 2025, about 640000-690000 tons of ternary precursors will be supplied to the three companies in the next four years (excluding Ningbo Ronbay New Energy Technology Co.Ltd(688005) in the agreement) The required 415000 tons of precursor (maximum value) corresponds to an average annual supply of about 16-172500 tons / year. The company’s existing ternary precursor capacity is 100000 t / A, which will reach 175000 T / A and 325000 T / a respectively from 2022 to 2023. Its own ternary cathode is 43000 T / A, and the ternary cathode capacity will reach 93000 T / A and 143000 T / A from 2022 to 2023 respectively. Considering the company’s own use and supply to LG and POSCO, the remaining ternary precursor capacity is basically underwritten.
Indonesia’s wet nickel project was put into operation and the nickel plate was officially put into operation: some production lines of the laterite nickel ore hydrometallurgy project with an annual output of 60000 tons of nickel and 7800 tons of cobalt have completed equipment installation and commissioning, and recently put into trial production, successfully producing the first batch of products. The company has tested that the main performance indexes of the products are qualified. The nickel plate began to land, and the integration of lithium battery materials was gradually formed. Huake 45000 ton pyrometallurgical project and Huafei 120000 ton wet nickel project are progressing smoothly and will be gradually put into operation from 2022 to 2023, contributing incremental profits.
Profit forecast, valuation and rating: the company has comprehensively arranged ternary and lithium iron phosphate cathode, which will further consolidate the leading advantage of cathode materials. With the release of the production capacity of nickel and lithium battery materials, we believe that the profit proportion of the company’s lithium battery industry chain will continue to increase, and we are optimistic about the investment opportunities brought by the double rise of the company’s performance and valuation. We do not consider the performance increment of lithium iron phosphate business temporarily and maintain the company’s profit forecast. It is estimated that the net profit attributable to the parent company from 2021 to 2023 will be RMB 3.25/41.4/5.67 billion respectively, with a year-on-year increase of 179% / 28% / 37%. The corresponding PE of the current stock price is 50 / 39 / 29x respectively, maintaining the “buy” rating.
Risk tip: the price of cobalt and copper fluctuates greatly, the progress of the company’s investment projects is less than expected, and the sales volume of new energy vehicles is less than expected; Risk of cash flow deterioration due to high capital expenditure.
