\u3000\u3 Guocheng Mining Co.Ltd(000688) 772 Zhuhai Cosmx Battery Co.Ltd(688772) )
Event: the company released its 2021 performance express on February 26. In 2021, the company achieved a total operating revenue of 10.347 billion yuan, an increase of 48.58% over the same period of the previous year; The operating profit increased by 1.54 billion yuan over the same period last year; The total profit was 1.026 billion yuan, an increase of 9.74% over the same period last year; The net profit attributable to the owners of the parent company was 947 million yuan, an increase of 15.95% over the same period last year.
In addition, on the same day, the company issued an announcement on the provision for asset impairment in 2021, confirming that the provision for inventory falling price was 204 million yuan and the impairment of fixed assets was 49.67 million yuan.
The high increase in revenue was in line with expectations, but the rapid rise of cathode materials such as lithium cobaltate led to inventory impairment and eroded profits. The data in the 2021 performance express objectively reflects the growth of the company: first, the high growth of total operating revenue of 48.58%, which may more truly reflect the growth of the company than profits.
Guanyu is the world’s second-largest battery cell enterprise after ATL. Although it has more than 20 years of battery manufacturing experience, it has actually been independent from Ha Guangyu for less than 5 years. Before 2021, which is not listed, the resources that can be invested are limited. Therefore, the downstream sales of the company are still dominated by laptops, and the self-sufficiency rate of packs is relatively small. In recent years, the company has started to cut into mobile phones quickly, and the progress of share improvement is obvious to all. Just looking at the achievements on the mobile phone side is enough to support the rapid growth in the next few years, and the high growth of operating revenue in 2021 is an important evidence of this advancement.
The second is the slight growth of operating profit and profit attributable to parent company, which seems to be low growth, but this is based on the provision for inventory falling price of 204 million yuan. If there is no provision for inventory falling price, the growth of profit attributable to parent company will be at least 30-40%.
The reason for the provision for inventory falling price is also explained very clearly in the announcement: the average market price of lithium cobaltate increased by more than 80% compared with 2020, and “the company’s sales price lags behind the price rise of raw materials, resulting in signs of impairment of the company’s inventory…” the price of lithium cobaltate and other cathode materials increased too much and too fast last year, It is the main reason affecting the company’s profits. From the industry dimension, we know that cell manufacturers such as ATL and Guanyu have actually raised prices to downstream end customers in the past two quarters to realize cost transmission. However, lithium cobalt oxide and lithium carbonate have risen too fast in the past few months. From the beginning of October 2021 to today, they have increased from 305000 yuan / ton to 534000 yuan / ton, an increase of 75%. The price transmission between cell manufacturers and downstream end customers cannot be as real-time as that of bulk commodities, so the shrinking of profit growth is a helpless problem faced by all enterprises in the industry. In fact, the price rise is not terrible. The key lies in the excessive volatility, which makes the upstream and downstream unable to normally estimate and timely adjust or transmit costs, resulting in such inventory falling price.
Objectively speaking, the crazy rise of cathode materials in a straight line of nearly 80-90 ° will not be normal. The impact of hoarding and speculation at the channel end and raw material supply end on the price has obviously exceeded the normal supply and demand. The growth of profits in 2021 still reflects the industry head attribute of the company. As a leading enterprise in the industry, Guanyu will not have the problem of supply interruption, and has advantages in bargaining power. It will get better prices than other small and medium-sized manufacturers. Therefore, the sharp rise of cathode materials is not only a challenge but also an opportunity for Guanyu, but also a strategic opportunity to continue to expand market share.
The rapid entry of key customers is an important premise for Guanyu to continue to grow beyond expectations. From the industry dimension, we know that the promotion of Guanyu’s terminal brand customers is continuing, especially the key customers in the industry. The introduction progress in recent years is expected to exceed expectations. From the perspective of the market competition pattern of the mobile phone cell industry, ATL has been dominant for many years, but this has given Guanyu sufficient growth space. Downstream customers also hope to improve the security of the supply chain and reduce the risk of single dependence, which is an important support for Guanyu’s continuous increase in the share of key mobile phone customers in related fields in the next few years.
Power and energy storage battery are the key layout areas of the company after listing, but the company adopts the strategy of steady development. With the landing of new production capacity this year, it is believed to have a good performance, but it is difficult to make a positive profit contribution in this field in the short term.
Profit forecast and rating: maintain the buy rating Zhuhai Cosmx Battery Co.Ltd(688772) is a battery enterprise second only to ATL in the world. Its technology accumulation and competitiveness are more guaranteed than other battery manufacturers starting from pack packaging in China. No matter from the permeable space of mobile phone cell, the continuous enhancement of integration from cell to pack, and the continuous extension of various application fields such as fast charging, energy storage and power, the future growth of the company is multi-dimensional, multi-directional and composite. For example, excluding the irrational impact caused by the recent unilateral rise of upstream materials, In recent years, the company will have a good year of continuous high growth, and the background of high raw material prices from 2021 to 2022 has laid more foreshadowing for the company’s future elasticity. We estimate that the company’s profits from 2021 to 2023 will be 947 million yuan, 1372 million yuan and 1895 million yuan respectively, and the corresponding valuations of the current market value are 46.8, 32.3 and 23.4 times respectively. Based on the impact of the price rise of upstream materials, The profit is slightly lower than that in our previous in-depth report, but this cyclical fluctuation will not damage the company’s internal value. On the contrary, it may further improve the industry share and competitive position of the company, and firmly maintain the company’s buy rating.
Risk tips: (1) the global economic downturn has led to lower than expected shipments of downstream consumer electronics; (2) The production of new production line is less than expected, and the development of new products is less than expected; (3) Risk of sharp fluctuations in raw material prices; (4) Lithium cobalt oxide and other raw materials continue to rise irrationally or fluctuate sharply for a long time.
