\u3000\u3 Shengda Resources Co.Ltd(000603) 876 Jiangsu Dingsheng New Material Joint-Stock Co.Ltd(603876) )
Battery aluminum foil: the cycle growth track of light assets, sodium ion accelerates commercialization and increases market space
Aluminum foil is widely used downstream, and the most concerned is lithium battery. Aluminum foil is used as positive collector in lithium battery, commonly known as battery aluminum foil. Judging from the track, battery aluminum foil shows the characteristics of light assets and cycle growth:
Asset light: different from copper foil focusing on assets (investment of RMB 600700 million per 10000 tons), aluminum foil assets are light (investment of less than RMB 100 million per 10000 tons). Under light assets, the investment effect of battery aluminum foil is better. Taking Jiangsu Dingsheng New Material Joint-Stock Co.Ltd(603876) as an example, the ROIC (unit profit / unit investment) is about 53%.
Periodicity: the direct material cost of battery aluminum foil accounts for about 85%, the main raw material is bulk commodity aluminum, and the pricing mode is cost plus based on aluminum.
Growth: benefiting from the high growth of new energy vehicle market, battery aluminum foil shows growth. We expect the global demand for lithium aluminum foil to be 320000 tons in 22 years and 97000 tons in 25 years, with a compound growth rate of 48%. In addition, aluminum foil is used for both positive and negative collectors of sodium ion batteries. If it is commercialized in large quantities, it is expected to greatly increase the demand for aluminum foil in the future.
The pattern of battery aluminum foil industry is concentrated, and the supply and demand is tight in the two-year dimension
Unlike the scattered pattern of copper foil, the pattern of aluminum foil of battery is relatively concentrated. The top three markets of battery aluminum foil account for 69%, ternary positive electrode and copper foil account for more than 30%, and iron lithium positive electrode and negative electrode account for more than 50%.
We expect the supply of battery aluminum foil to be in tight balance in the next two years. The demand side of battery aluminum foil increases rapidly, but the supply side increases slowly, mainly due to 1) the long production expansion cycle of battery aluminum foil, and the equipment delivery cycle of new entrants is about 1.5-2 years; 2) It is difficult for traditional aluminum foil manufacturers to change production, which requires time to accumulate technology; 3) The verification cycle of vehicle specification level customers is long.
Jiangsu Dingsheng New Material Joint-Stock Co.Ltd(603876) : the leader in the battery aluminum foil industry, which is expected to increase both volume and profit in the future
The loss in 20 years was caused by traditional business and one-time loss, and it has been turned into profit in 21 years. The company suffered losses in 20 years, mainly due to 1) the low capacity utilization rate of traditional aluminum foil business affected by the epidemic, and the loss of Liansheng new material, a subsidiary, was RMB 115 million in 20 years; 2) The exchange loss of traditional aluminum foil export was 42 million yuan;
3) the fluctuation of aluminum price leads to the loss of commodity futures of RMB 50 million. In the first three quarters of 21 years, it has turned losses into profits, with a net profit attributable to the parent company of 260 million yuan.
Accelerated release of production capacity + high-quality customer structure, sodium battery capacity expansion market space, and the future growth can be expected.
Capacity & Customer: we expect the company’s effective capacity to reach 60000 to 150000 tons in the 21st and 22nd years. Customers include Contemporary Amperex Technology Co.Limited(300750) , Byd Company Limited(002594) , LGC and other mainstream battery manufacturers.
In terms of equipment and technology, know how has accumulated profound knowledge to reduce costs. The investment side adopts domestic equipment + customized development, the production expansion cycle and unit investment are lower than those of peers, and the production side adopts the casting and rolling process with lower cost.
As a leading enterprise of battery aluminum foil, the company is expected to fully benefit from the large volume of sodium battery. Ningde released sodium ion batteries in July 2021, and it is expected that a basic industrial chain will be formed in 2023. In December 21, the company signed a framework agreement with Ningde of no less than 512000 tons in four years. We believe that the positive and negative collectors of sodium battery are made of aluminum foil, and the company is expected to benefit as a leader.
It is estimated that the company will ship 120000 and 170000 tons of battery aluminum foil in 22-23 years, and the net profit attributable to the parent company will be RMB 810 million and RMB 1.13 billion respectively. Considering the stable leading position of the company and good customer structure, the company will be given a 22-year 30x valuation, a target price of RMB 50, the first coverage and a “buy rating”.
Risk tips: the sales volume of electric vehicles is lower than expected, the risk of aluminum price fluctuation, the risk of exchange rate fluctuation, the release of the company’s production capacity is lower than expected, and the prediction deviation.
