\u3000\u3 Guocheng Mining Co.Ltd(000688) 772 Zhuhai Cosmx Battery Co.Ltd(688772) )
Matters:
The company recently announced to invest 4 billion yuan to build a 15gwh new lithium-ion battery project in Chongqing, mainly energy storage batteries. It is planned to start construction in 2022 and put into operation in batches, and all construction will be completed in 2025. The company released the performance express of 2021, and achieved an operating revenue of 10.347 billion yuan in 2021, with a year-on-year increase of 49%; Corresponding to Q4, the revenue was 2.694 billion yuan, an increase of 5% month on month. In 2021, the net profit attributable to the parent company was 947 million yuan, with a year-on-year increase of 16%; Corresponding to Q4, the net profit attributable to the parent company was 133 million yuan, down 44% month on month.
Guoxindian’s new viewpoint:
1) the company accelerates the layout of power and energy storage business and develops the second growth curve. In terms of power battery, the company takes 12V start stop battery as a breakthrough, obtains the fixed points of SAIC and other customers, and arranges 48V battery, Bev battery and other fields at the same time. In terms of energy storage batteries, the company actively cooperates with European household energy storage customers, and carries out technical reserves of energy storage products in the fields of household, industry and Commerce and communication. The company’s existing power and energy storage battery capacity is about 3gwh, and the construction of 10gwh was started in the early stage. The general plan of 15gwh after the expansion has reached 28gwh, which is expected to be put into operation in batches from 2023 to 2025.
2) the company’s consumer battery business is advancing steadily, and the rise in the price of raw materials has caused short-term pressure on its performance. At the end of 2021, the nominal capacity of consumer batteries reached nearly 540 million, an increase of more than 80% year-on-year. We estimate that the sales volume of the company’s consumer batteries is expected to reach 370380 million in 2021, with a year-on-year increase of nearly 40%. The price of lithium cobaltate continued to rise in 2021, with the annual average price reaching 328000 yuan / ton (+ 57%), and the company accrued an annual impairment loss of 250 million yuan due to the rise of material cost. Looking forward to 2022, new customers will continue to make breakthroughs, and it is expected to supply notebook batteries to major overseas consumer electronics manufacturers, and resume the supply of Samsung mobile phones after the implementation of production capacity. At the same time, the company actively negotiated and adjusted prices with downstream customers, improved capacity utilization, and took many measures to alleviate cost pressure.
3) we believe that the company’s consumer battery shipments will grow steadily, and the short-term cost pressure will be gradually relieved. At the same time, the company actively distributes the power and energy storage battery business. Considering the pressure of raw materials, we slightly lowered the original profit forecast. It is estimated that the net profit attributable to the parent company from 2021 to 2023 will be 947 / 13.64 / 2.034 billion yuan (the original forecast was 1.206/15.72/2.105 billion yuan), an increase of 16 / 44 / 49% year-on-year, with corresponding EPS of 0.84/1.22/1.81 yuan respectively. The corresponding PE under the current stock price is 39 / 27 / 18 times respectively, maintaining the “buy” rating.
Comments:
The company accelerated the construction of power and energy storage battery capacity and cultivated new performance growth points
In terms of power battery, the company has solid technical strength and has nearly 30 related patents covering 12V power on / off core, power battery electrolyte, high-power battery and so on. The company cut into the market from 12V lithium battery and actively laid out in the field of 48V lithium battery and Bev battery. At present, the company has obtained the fixed point of 12V battery supply for SAIC Zhiji LS7 model, and is expected to realize mass supply in 2022. It is expected to continue to develop international customers in the future. In terms of production capacity, the company began to build 10gwh production capacity in Zhejiang and is expected to be put into operation in 2023.
In terms of energy storage batteries, the company has actively cooperated with European household energy storage customers, and its products are distributed in household, industrial and commercial, communication base stations and other application fields. According to GGII data, the shipment volume of China’s lithium battery energy storage market in 2021 was 37 GWH, with a year-on-year increase of more than 110%; It is estimated that by 2025, China’s total shipment of energy storage lithium batteries will reach 180gwh, with a CAGR of 49% for four consecutive years. The newly constructed 15gwh capacity in Chongqing is mainly energy storage batteries, and grasp the growth opportunity of the energy storage industry.
The rising price of raw materials leads to short-term pressure on profits, and the company actively negotiates the price to transmit pressure
The company achieved a year-on-year increase of RMB 10.31 billion, with a year-on-year increase of 4.9%; Corresponding to Q4, the revenue was 2.694 billion yuan, an increase of 5% month on month. In 2021, the net profit attributable to the parent company was 947 million yuan, with a year-on-year increase of 16%; Corresponding to Q4, the net profit attributable to the parent company was 133 million yuan, down 44% month on month. The significant decline in profits in the fourth quarter was mainly due to the rapid rise in costs caused by lithium cobaltate and the lag of the company in downstream price adjustment. The rise in the price of raw materials and the elimination of some old equipment also caused asset impairment. A total of 255 million yuan of asset impairment and credit impairment losses were withdrawn in 2021.
The company has been deeply engaged in 3C lithium battery for many years, and the rapid expansion of production capacity has promoted the rapid improvement of shipment. Focusing on the field of soft pack lithium battery, the company is a global leader in R & D investment and product performance. It is gradually comparable with the industry leader ATL, and has a competitive advantage compared with LG new energy and Samsung SDI. With the acceleration of domestic substitution in the consumer battery market, the construction of Zhuhai and Chongqing bases of the company has been accelerated. By the end of 2021, the nominal annual capacity of the company’s consumer batteries reached nearly 540 million, and it is expected to exceed 660 million in 2022. In terms of customers, the company actively develops notebook computer customers and is expected to supply large overseas consumer electronics manufacturers in the second half of 2022. After the implementation of the new production capacity, the company has resumed the supply of Samsung mobile phones and actively explored other mobile phone brands. Looking forward to 2022, we expect that the company’s consumer battery shipments are expected to reach 450460 million, with a year-on-year increase of more than 20%.
The price rise of lithium cobaltate put pressure on short-term performance, and the company actively adjusted the price along the price to transmit pressure. Since 2021, the price of lithium cobaltate has continued to rise, and the annual average price has reached 328000 yuan, a year-on-year increase of 57%. The company actively negotiated and adjusted prices with downstream customers, but due to a certain time lag, the profit of 2021q4 decreased significantly. Since 2022, affected by the price of lithium resources, the price of lithium cobaltate has risen to 530000 yuan / ton in early March, a further increase of 26% over the beginning of the year. The company will continue to actively negotiate the price at a favorable price, transmit the cost pressure, and reduce the cost and increase efficiency through the improvement of production line technology.
Investment suggestion: be optimistic about the company’s capacity expansion and profit elasticity under favorable price negotiation, and maintain the “buy” rating
The company’s consumer battery shipments are expected to grow steadily, and the cost transmission capacity is strong in the long run. At the same time, the company actively distributes the power and energy storage battery business, and the long-term development prospect is expected. Considering the pressure of the rise in the price of raw materials on the company’s short-term profits, we slightly lowered the original profit forecast. It is expected that the company’s net profit attributable to the parent company will be RMB 947 / 1364 / 2034 million from 2021 to 2023 (the original forecast was RMB 1.206 / 1572 / 2105 billion), with a year-on-year increase of 16 / 44 / 49%, and the corresponding EPS will be RMB 0.84/1.22/1.81 respectively. The corresponding PE under the current stock price is 39 / 27 / 18 times respectively, maintaining the “buy” rating.
Risk tips
The demand for consumer electronics is lower than expected, the price of raw materials continues to rise, the production of new production capacity is lower than expected, and the development of power and energy storage battery customers is lower than expected.
