Zhejiang Hailiang Co.Ltd(002203) (002203)
Cut into the copper foil track, create the dual main business of “copper pipe” + “copper foil”, and give a “buy” rating for the first time
The company has been deeply engaged in the field of copper processing for more than 30 years. In terms of copper pipe business: in the future, the production capacity will double, the industry prosperity will rebound, and the company’s cost reduction and efficiency increase will promote the continuous improvement of its ton profit, and the company’s traditional business will return to high growth; In addition, the company has comprehensively cut into the lithium copper foil business, and the new energy business is ready to go. We estimate that the net profit attributable to the parent company from 2021 to 2023 will be RMB 1.308/1.722/2.447 billion respectively, the corresponding EPS will be RMB 0.67/0.88/1.24 respectively, and the corresponding PE of the current stock price will be 18.6/14.2/10.0 times respectively. The “buy” rating will be given for the first time.
The rest is the king: the demand for copper pipe is stable and good, and the industry is deeply shuffled
Demand side: after a continuous “cold winter”, the demand for copper pipes is expected to pick up. On the one hand, the promotion of the new national standard promotes the steady increase of copper pipe demand. On the other hand, new consumption fields such as construction, medical treatment and seawater desalination are also flowering at many points. Supply side: in the post epidemic era, the industry has recovered seriously, and the concentration is continuing to move closer to the head. In the past few years, some leading enterprises have suffered substantial losses, the profits of small and medium-sized factories may be more worrying, and the depth of industry reshuffle is unprecedented. The company is still expanding against the trend and will become the “king of the rest” of the industry.
Lithium copper foil ushers in the golden age and speeds up the layout relying on the advantage of late development
“Extremely thin” lithium copper foil will be the mainstream trend in the future. The supply and demand gap of extremely thin lithium copper foil will intensify, and the rigid supply and demand gap is difficult to make up in the short term. We expect the global gap to expand to 139300 tons by 2023. The company can give full play to the profound foundation of 30-year development to form the ability to quickly cut into the lithium copper foil track. It is expected that the annual capacity of lithium copper foil will reach 5 / 10 / 120000 tons from 2023 to 2025, and the annual capacity of standard foil will reach 30000 tons in 2025.
Technology + scale + management take turns to promote the company to continuously reduce costs and increase efficiency
Technology: new production line technology + Intelligent factory enabled production, and the space for cost reduction and efficiency increase per capita of single line is expected to be further explored. Scale: technological innovation will promote the future production base to form a capacity scale of 100000 tons, and the production cost is expected to decrease greatly. Management: fine management enables long-term sustainable cost reduction, and the manufacturing cost per ton is expected to continue to decline.
Capacity doubling + ton profit repair, performance is expected to usher in a simultaneous rise in volume and price
It is expected that the overall production capacity will double and the market share will continue to increase in 2025; On the one hand, the company continues to achieve internal cost reduction. On the other hand, its processing fee is expected to pick up at the bottom in the future. Price increase + cost reduction jointly promote the steady improvement of ton profit.
Risk tip: weak downstream demand of the industry; Supply clearing is less than expected; The progress of new projects is not as expected.
