Shenzhen Dynanonic Co.Ltd(300769) (300769)
[key investment points]
The output of nano lithium iron phosphate is the first in China for three consecutive years. Shenzhen Dynanonic Co.Ltd(300769) is committed to the R & D, production and sales of core materials for lithium-ion batteries. It is a leading nano lithium iron phosphate supplier in China. Since 2018, the company’s lithium iron phosphate output has ranked first for many consecutive years. It is expected that the capacity of lithium iron phosphate will reach 192000 tons by the end of 2021. It is a well deserved leading enterprise in the industry.
Power + energy storage dual wheel drive, lithium iron phosphate material has entered a golden growth period. Lithium iron phosphate battery has better cost performance than ternary battery, and is widely used in the field of new energy vehicles and energy storage. The cost performance advantage promotes the continuous improvement of the market penetration of lithium iron power, and the commercialization conditions of electrochemical energy storage are basically mature, providing a stable increase for the demand for lithium iron phosphate. We expect that the demand for lithium iron phosphate materials will reach 2.169 million tons in 2025, and the average compound growth rate in the four years from 21 to 25 will be 57%.
The company has both technical and cost advantages, with key customers + capacity expansion as a solid leader. The company created the self heating evaporation liquid phase method and cooperated with the self-developed multi-dimensional modification process to create high-quality products. Based on the liquid-phase process, the production cost of the company is lower than that of its peers, and the active innovation of the raw material system is expected to open the space for cost downward. The company deeply binds high-quality downstream customers and jointly builds production capacity with Contemporary Amperex Technology Co.Limited(300750) and Eve Energy Co.Ltd(300014) to form interest binding and ensure the stability of downstream demand. The company’s capacity planning is clear. It has planned a total capacity of 410000 tons of cathode materials and 200000 tons of precursors. It is expected to be put into operation in 2023. The capacity planning and production expansion speed are in the forefront of the industry.
The company started the industrialization process of positive lithium supplement, providing incremental space for performance growth. The company’s self-developed lithium ferrite replenishing agent is applicable to the positive poles of lithium batteries of various systems, which can significantly improve the energy density of batteries, improve the cycle performance, enhance the market competitiveness of the company’s iron lithium materials, and provide incremental space for the company’s performance growth.
[investment advice]
We estimate that from 2021 to 2023, the operating revenue of the company will be RMB 4.097/10.86/16.775 billion respectively, the net profit attributable to the parent company will be RMB 348/9.93/1.678 billion respectively, the EPS will be RMB 3.90/11.13/18.81 respectively, and the current price corresponding to PE will be 125.91/44.12/26.12 times (closing price on January 5, 2022), giving the rating of “overweight”.
1. Key assumptions
The demand for lithium iron phosphate batteries mainly comes from the power market and energy storage market. In the power market, the optimization of battery pack structure and the decline of government subsidies promote the rapid penetration of iron lithium batteries in the passenger car market. In the energy storage market, the commercialization conditions of electrochemical energy storage have been basically mature. At the same time, the comprehensive performance of iron lithium battery is more suitable for energy storage than ternary battery, and the permeability remains high. It is estimated that the demand for lithium iron phosphate materials will reach 2251000 tons in 2025, and the four-year average compound growth rate from 21 to 25 will be 57%.
According to the company’s capacity planning, it is estimated that the company’s effective capacity from 2021 to 2023 will be 92000 / 202000 / 342000 tons respectively, and the production and sales rate will be maintained at 95%, with corresponding shipments of 88000 / 196000 / 337500 tons respectively. Considering the short-term tight supply and demand of lithium iron phosphate, the company’s product price is expected to remain high. It is estimated that the average sales price of the company’s products from 2021 to 2023 will be 46600 yuan / ton, 51500 yuan / ton and 49700 yuan / ton, and the gross profit margin will be 22.69% / 22.58% / 22.5% respectively.
2. Innovation
In terms of industry structure, the market believes that the iron lithium industry has basically completed the clearing of backward production capacity after the policy cycle reshuffle from 2017 to 2020, and the industry concentration is expected to continue to increase in the future. We believe that a new round of production expansion cycle of iron lithium industry has been opened, market participants are increasing, and the improvement of industry concentration is blocked in the short term. In the long term, the share of leading enterprises with technology, cost and industrial chain resources tends to increase.
In terms of the company’s competitive advantage, we believe that the company takes the lead in realizing the industrialization of new phosphate cathode materials, and is expected to maintain a continuous technological lead in the next generation of iron lithium materials. At the same time, the cost advantage of liquid-phase method over solid-phase method has become a market consensus. We note that the company is actively laying out a new raw material system, which is expected to form a lithium phosphoaluminite lithium phosphate lithium iron phosphate process route in the future, and further open the downward space of lithium iron phosphate cost through innovative raw material system.
3. Foresight of important matters
1. The expanded capacity is gradually released, and the production line maintains full capacity;
2. The positive electrode lithium supplement agent and new phosphate positive electrode materials have been verified by the downstream battery factory;
3. The company has made major breakthroughs in lithium iron phosphate production technology.
[risk tips]
Capacity release is less than expected;
Downstream demand is lower than expected;
Industry competition intensifies and the company’s technological leadership weakens.
