\u3000\u3 Guocheng Mining Co.Ltd(000688) 779 Hunan Changyuan Lico Co.Ltd(688779) )
The company is a cathode manufacturer under Minmetals Group and a leading enterprise of ternary materials in China. Backed by China Minmetals Group, the company has been deeply engaged in the cathode material industry for nearly 20 years. It has the layout of the whole cathode industry chain, including multi-element material precursors, multi-element cathode materials, lithium cobalt oxide and other lithium battery cathode materials and nickel hydrogen battery cathode materials. In China’s ternary market structure in 2020 and 2021, the company’s market share reached 9%, ranking the top four in the industry. The company has implemented a sound business strategy and expanded its performance in an orderly manner from 2016 to 2020; Benefiting from its profound industrial accumulation and the high outlook of the new energy industry, the company’s performance ushered in rapid growth in 2021, with revenue and net profit attributable to the parent company of 6.841 billion yuan and 701 million yuan respectively, an increase of 240.25% and 538.17% at the same time.
The technical routes of ternary cathode are diverse, and the 4680 system creates broad increment. High nickel and cobalt free is the main direction of ternary cathode. There are two main technical routes for the stability of nickel rich cathode: (1) single crystal: the crystal structure of single crystal material is more stable than that of polycrystalline material, which can effectively improve the thermal stability and cycle life of the material; (2) Element doping: improve the structural stability of nickel rich cathode materials by introducing trace dopants. In addition, the launch of Tesla 4680 large round column system improves the stability and safety of the battery, and carries the energy density advantage of high nickel ternary materials to further enhance the high nickel ternary market space. The multi-path development superposition of ternary cathode contributes additional increment by 4680. We predict that ternary battery will contribute 953.3gwh of installed capacity in 2025, and the global demand for ternary cathode materials will reach 1.579 million tons in 2025.
The group’s internal supply of resources + integrated layout enables cost reduction, binds high-quality customers and creates strong profitability. The company has significant cost side advantages and its profitability is better than the industry average, mainly due to: (1) the parent company Minmetals Group takes internal coordination as the discipline to ensure the priority supply of nickel, cobalt, lithium and other resources of the company; (2) Acquire a wholly-owned subsidiary for the production of ternary cathode precursors and master the core technology of the industrial chain; (3) The company’s leading equipment, high degree of automation and prominent scale effect have led to the continuous decline of processing cost, labor cost and single ton energy consumption. The company has high-quality customer structure and focuses on domestic and foreign markets. China’s customers cover Contemporary Amperex Technology Co.Limited(300750) , Byd Company Limited(002594) , Eve Energy Co.Ltd(300014) , Sunwoda Electronic Co.Ltd(300207) and other downstream first-line lithium battery enterprises, and continue to develop well-known overseas battery manufacturers such as Toyota, Panasonic, Murata, Samsung SDI and LG chemistry. With the further launch of production capacity in the future, the volume of customer orders is imminent.
Investment suggestion: according to the calculation, the company’s revenue in the 21-23 years was 6.841 billion yuan, 15.908 billion yuan and 29.108 billion yuan respectively, with a year-on-year growth rate of 240.2%, 132.5% and 83%. The net profit attributable to the parent company was 701 million yuan, 1.267 billion yuan and 1.935 billion yuan, with a year-on-year growth rate of 538.1%, 80.6% and 52.7%. The current share price corresponding to PE was 50, 28 and 18 times respectively. Considering that the company is in a high-quality track and has significant integration advantages, The cost control is obviously better than the industry average. It is covered for the first time and given a “recommended” rating.
Risk tip: the sales volume of new energy vehicles is lower than expected; The progress of capacity expansion is less than expected; Price fluctuation of raw materials; Industry competition intensifies; Risk of large customer concentration.
