Ningbo Jintian Copper (Group) Co.Ltd(601609) (601609)
Ningbo Jintian Copper (Group) Co.Ltd(601609) : a high-quality copper processing enterprise with high turnover, stable profit and continuous growth
Ningbo Jintian Copper (Group) Co.Ltd(601609) the main products include copper processing products and magnetic materials. The weighted average annual production capacity from January to September 2020 is: 520000 tons of copper wire row, 230000 tons of copper rod, 170000 tons of copper pipe, 120000 tons of copper strip and 100000 tons of electromagnetic wire. In addition, the current production capacity of neodymium iron boron magnetic materials is 5000 tons. The revenue of copper processing accounts for 95% and the gross profit accounts for 88%. The company has been engaged in copper processing for more than 30 years. Thanks to its high operation and management level and digital and information-based business processes, the total asset turnover rate of the company has been maintained at more than 4 for many consecutive years, which is much higher than that of other processing enterprises in the same industry; The pricing mode of “raw material price + processing fee” and refined management make the cost transmission effective, and the company’s gross profit margin and net profit margin remain stable throughout the year. The total output of copper products increased from 600000 tons in 2015 to 1.38 million tons in 2020. The output doubled and increased in five years, driving the steady and upward performance.
Copper processing: the industry concentration has increased and the competition pattern has improved. It is estimated that the production capacity of copper processing products will reach 2 million tons in 2022
In the complete market competition pattern, industry leading enterprises improve market share and industry concentration by virtue of scale effect, low cost and other advantages. Due to years of Red Sea competition in the copper processing industry, fixed asset investment has stagnated for 6 years. We can see from the proportion of A-share large copper processing enterprises in the national copper output that the market share of large enterprises has increased from 11% in 2016 to 23% in 2020. Ningbo Jintian Copper (Group) Co.Ltd(601609) has survived the fierce Red Sea competition, become the leader of copper processing, and is continuously expanding its market share. It is expected that with the operation of convertible bond project, the total capacity of copper processing will reach 2 million tons in 2022.
Electromagnetic flat wire: new energy drives the demand for high-end new materials. The company seizes the opportunity to expand production and volume, and the production capacity will reach 20000 tons by 2022
Compared with traditional motors, flat wire motors have the advantages of high slot filling rate, good heat dissipation performance, small volume and low electromagnetic noise. The application of electromagnetic flat wire can improve the efficiency of the whole vehicle by about 20%. After the battery efficiency is improved to a certain extent, the improvement of motor efficiency has attracted attention. New energy electromagnetic flat wire has certification barriers and technical barriers. The company has been deeply engaged in electromagnetic wire for many years and has rich experience in electromagnetic wire R & D and production. At present, the company’s electromagnetic flat wire products have entered the supplier system of well-known new energy automobile enterprises and have entered the stage of mass production. At present, the company actively plans and expands the capacity of electromagnetic flat wire. It is expected that the capacity of new energy electromagnetic flat wire will reach 20000 tons by 2022, and the subsequent expansion plan will be determined according to the market situation.
Magnetic materials: new energy vehicles, wind power, variable frequency air conditioners and energy-saving motors demand NdFeB magnetic materials, and the company’s 8000 ton magnetic material production capacity is under construction
In 2001, the company began to lay out its magnetic materials business and has entered the supply chain of many well-known enterprises such as Crrc Corporation Limited(601766) , German AMK, German Brose group, Italian Rafah and so on. At present, Ningbo base has a production capacity of 5000 tons; Baotou base is under investment and construction. The phase I 4000 ton capacity is expected to be completed in August 2023, and the phase II 4000 ton capacity will be completed in December 2025. After being put into operation, it has a total neodymium iron boron capacity of 13000 tons.
Profit forecast and valuation
It is estimated that from 2021 to 2023, the company will realize operating revenue of RMB 75.06 billion, 79.777 billion and 93.635 billion, net profit attributable to the parent company of RMB 719 million, 972 million and 1.280 billion, and the current price corresponding to PE is 19.68 times, 14.56 times and 11.05 times. Based on the growth expectation of the company, the valuation is given according to 20 times the average valuation of comparable companies, corresponding to the market value of 19.5 billion yuan. The target price of the stock price is 13.14 yuan. There is 35% room for rise. It is covered for the first time and given a “buy” rating.
Risk statement
1. Risk of large fluctuation of copper price; 2. The concentration of copper processing industry is lower than the expected risk; 3. The Federal Reserve significantly tightened liquidity risk; 4. Risk that the development of new energy vehicle industry is less than expected
