Lizhong Sitong Light Alloys Group Co.Ltd(300428) (300428)
The layout of the three main businesses is improving day by day, and actively enter the field of new energy
The company has been deeply engaged in the field of master alloy for a long time. With the continuous injection of aluminum alloy wheels and recycled cast aluminum alloy business in 2018 and 2020, the layout of the three main businesses is becoming more and more perfect. Since then, in July 2021, the company invested in the construction of lithium battery new material project and actively entered the field of new energy. We estimate that the net profit attributable to the parent company from 2021 to 2023 will be RMB 450 million, RMB 788 million and RMB 1143 million respectively, and the EPS will be RMB 73 million, RMB 128 million and RMB 185 respectively. The current share price corresponds to 38.3, 21.9 and 15.1 times of PE from 2021 to 2023 respectively. The first coverage is given a “buy” rating.
The three main businesses go hand in hand to help the company accelerate its growth
(1) Recycled cast aluminum alloy: it is expected that the sales volume of the company’s cast aluminum alloy will gradually increase from 730000 tons to 1.5 million tons from 2020 to 2025. At the same time, the proportion of recycled aluminum will increase from 48% to 80%, which has a significant cost reduction effect. In addition, the company has successfully developed heat-free alloy to break the foreign technological monopoly, and the cost is about 20% lower than that of overseas. It is expected to benefit from the trend of integrated die casting in the future Step volume.
(2) Aluminum alloy wheels: the company has an existing capacity of 18.45 million pieces / year and another capacity under construction of 4.6 million pieces / year. In the future, the company will actively enter the high value-added fields such as commercial vehicles and new energy vehicles to realize the simultaneous increase of product volume and price.
(3) Master alloy: the high-end grain refiner project with an annual output of 15000 tons and the aluminum based rare earth master alloy project with an annual output of 25000 tons have been put into operation since 2021q4. In addition, the aerospace special master alloy is in rapid volume, and the overall profitability is expected to be significantly improved in the future.
Invest in the construction of lithium battery new material project and create the second growth curve of the company
In July 2021, the company announced to invest about 1.2 billion yuan to build a new energy lithium battery new material project in two phases, The project has many great significance: (1) produce fluoride products, ensure the supply of master alloy raw materials and reduce production costs. (2) invest in the construction of 3000 tons / year capacity of sodium fluoride (electronic grade) as the technical reserve for the material end of sodium ion battery. (3) open up another main industry and build 18000 tons capacity of lithium hexafluorophosphate (LiPF6) and lithium difluorosulfimide (lifsi) has a production capacity of 8000 tons. With the successive implementation of phase I and phase II projects, lithium salt products will gradually increase in volume, and the company’s performance is expected to usher in a centralized release.
Risk tips: the price of raw materials fluctuates sharply, the penetration rate of new energy vehicles is lower than expected, and the production capacity launch process is lower than expected.
