Hunan Zhongke Electric Co.Ltd(300035) (300035)
event
Hunan Zhongke Electric Co.Ltd(300035) recently announced that it is planned to build the "integration project of lithium battery cathode materials with an annual output of 100000 tons" in Gui'an new area, Guizhou, with a total investment of about 2.5 billion yuan.
Key investment points
Actively expand production capacity and gradually enter the front line
The company is the main supplier of lithium battery negative electrode. According to Xinlu lithium battery, the market share of the company will be 6% in 2020 and 8% from January to September 2021. By the end of September 2021, the negative electrode capacity of the company was 62000 tons, Graphitization capacity 35000 tons (including 15000 tons of energy gathering) and products in short supply. The company actively expanded production capacity and accelerated capital expenditure. From January to September 2021, the capital expenditure was 280 million yuan, 2.5 times that of 2020. At the same time, the company plans to raise an additional 2.2 billion yuan for the construction of 80000 tons of negative electrode and 45000 tons of graphitization capacity. In addition, the company and Yiwei jointly built 100000 tons of negative electrode integrated capacity in Qujing, Yunnan, superimposing the company's plan Invest in the construction of 100000 tons of integrated production capacity in Gui'an, Guizhou. Overall, the company has planned a negative electrode capacity of about 350000 tons and a graphitization capacity of about 300000 tons (including 30000 tons of energy collection). It has actively expanded its capacity and entered the first-line negative electrode leader.
We believe that the company is deeply bound with high-quality battery manufacturers such as Yiwei, actively raising funds, introducing war investment and Shenzhen Venture Capital to scale up capacity expansion, and the integrated layout meets the strong demand. At present, the negative electrode industry presents four major and three small patterns. The company is expected to actively seize the market share through customer binding and integration strategy, and move from the second line to the first line.
Abundant orders and eye-catching performance
With the continuous embodiment of the company's scale effect and the accelerated layout of graphitization integration, the profitability is expected to rise steadily, driving the continuous optimization of the balance sheet. Based on the strong downstream demand, the company expects that the purchase intention demand in 2022 and 2023 will be 207000 tons and 310000 tons respectively, with abundant orders, and the sales volume is expected to continue to grow at a high speed.
The company acquired Xingcheng graphite in 2017, Gretel in 2018 and Jineng new materials in 2019, successfully transformed and realized the integrated layout of graphitization and negative electrode. The company's performance has achieved rapid growth. From January to September 2021, the company achieved a revenue of 1.388 billion yuan, yoy + 117%, and a net profit attributable to the parent company of 251 million yuan, yoy + 123%. From January to September 2021, the negative electrode sales volume of the company was 39200 tons, yoy + 117%, the corresponding unit price was about 30000 yuan / ton, the corresponding net profit per ton was about 5500 yuan, and the gross profit margin was 30.74%. The gross profit margin decreased compared with 2020, mainly due to the increase in the prices of coke raw materials and graphitization processing fees.
Deeply cultivate the negative electrode industry, with excellent growth
With a forward-looking strategic vision, the company has entered and rooted in the negative electrode industry through extensive M & A and actively developed customers. At present, it has included global high-quality customers such as Byd Company Limited(002594) , ski, AVIC lithium battery and Yiwei. According to xinlune lithium battery, China's negative electrode output from January to November 2021 is about 610000 tons, yoy + 86%. Looking forward to the future, the negative pole industry has sufficient growth. The power and energy storage will maintain high-speed growth and drive the high growth of negative pole demand. The company is in a high-quality track and has broad prospects.
We believe that the company takes root in the negative pole, covers the two golden tracks of electric vehicles and energy storage, and reduces the cost through integrated layout. On the whole, the company has a clear business layout, contributes to carbon neutralization, continuously reduces costs, seizes market share, and can continue to grow at a high speed.
Profit forecast
Based on the principle of prudence, the impact of additional issuance on performance and share capital will not be considered for the time being. It is estimated that the net profit attributable to the parent company in 2021, 2022 and 2023 will be RMB 350 / 680 / 960 million respectively, EPS will be RMB 0.55/1.05/1.49, and the corresponding PE will be 55 / 29 / 20 times respectively. Based on the company's high-quality track, excellent customers, positive capital expenditure and integrated industrial layout in line with the future development trend, we are optimistic about the company's medium and long-term upward development opportunities and give a "recommended" rating.
Risk statement
Policy fluctuation risk; Downstream demand is lower than expected; The product price is lower than expected; Risk of deterioration of competition pattern; The progress of additional issuance is less than expected; Capacity expansion and digestion were less than expected.
