Zhejiang Huayou Cobalt Co.Ltd(603799) (603799)
Event: the company announced after hours on November 30, 2021 that it had signed a strategic cooperation agreement with Beijing Easpring Material Technology Co.Ltd(300073) . Under the condition that Zhejiang Huayou Cobalt Co.Ltd(603799) provided Beijing Easpring Material Technology Co.Ltd(300073) with a competitive pricing method for metal raw materials and precursor processing fees, it planned to purchase 300000-350000 tons of ternary precursors from the company from 2022 to 2025. The specific purchase of goods shall be subject to the monthly purchase and sales order negotiated or signed separately, and the specific price shall be implemented according to the pricing method agreed in the agreement. On the basis of signing the ternary precursor, the two sides will also jointly carry out the comprehensive development and utilization of high-quality mineral resources such as nickel, cobalt, manganese and lithium in the upstream mineral resources.
comment:
High nickel products are recognized again, and Ningbo Ronbay New Energy Technology Co.Ltd(688005) will go to the next city after cooperation: the company has signed a strategic cooperation agreement with Ningbo Ronbay New Energy Technology Co.Ltd(688005) on November 20, and Ningbo Ronbay New Energy Technology Co.Ltd(688005) will purchase Zhejiang Huayou Cobalt Co.Ltd(603799) ternary precursors of no less than 180000 tons from 2022 to 2025. This cooperation with Beijing Easpring Material Technology Co.Ltd(300073) once again shows that Zhejiang Huayou Cobalt Co.Ltd(603799) high nickel product quality and the advantageous position of upstream resource layout have been recognized in the industry.
Ternary precursors are expanding rapidly, and there is still surplus capacity for export: the company’s existing ternary precursor capacity is 100000 t / A, which will reach 175000 T / A and 325000 T / A from 2022 to 2023 respectively. The current production capacity of cathode materials is 56000 tons / year (43000 tons of ternary cathode), and the production capacity of ternary cathode will reach 93000 tons and 143000 tons / year from 2022 to 2023 respectively. The production capacity of ternary precursor is still surplus and will continue to be supplied to foreign countries.
The layout of nickel plate is about to land, and the lithium battery integration is preliminarily taking shape: 60000 tons of cobalt nickel hydroxide in Indonesia Huayue will be put into operation by the end of 2021, the nickel plate begins to land, and the lithium battery material integration is gradually taking shape. Huake and Huafei nickel projects 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 3.25/4.14/5.67 billion respectively, with a year-on-year increase of 179% / 28% / 37%. The corresponding PE of the current stock price is 49 / 38 / 28x 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.
