\u3000\u30 Chongqing Baiya Sanitary Products Co.Ltd(003006) 47 Shenzhen Fluence Technology Plc(300647) )
Event: the company released its 2021 annual report on March 19, realizing an operating revenue of 580 million yuan, a year-on-year decrease of 4.88%; The net profit attributable to the parent company lost 162 million yuan, a year-on-year decrease of 114695%; Deduction of non net profit loss of 169 million yuan, a year-on-year decrease of 4056526%. Among them, the operating revenue in the fourth quarter was 217 million yuan, a year-on-year decrease of 11.18%; The net profit attributable to the parent company lost 144 million yuan, a year-on-year decrease of 167038%; Deduction of non net profit loss of 144 million yuan, a year-on-year decrease of 186545%. In addition, the company plans to issue shares to specific objects through simple procedures, and the total fund-raising is expected to be no more than 220 million yuan, which will be used for the phase I sub project of the construction of lithium battery cathode key material production base.
Business in low value-added LED lighting and other fields continued to shrink, focusing on the core main line of key materials for lithium cathode. In terms of products, the company’s revenue of LED lighting, LED heat dissipation, air conditioning and energy-saving services decreased significantly year-on-year in 2021, with – 17.5%, – 20.5% and – 71.3% respectively. It is obvious that the total amount of traditional business represented by LED lighting is gradually shrinking: the company accrued 117 million yuan for credit and asset impairment in 2021, including jiongda energy, a subsidiary related to LED CIC optoelectronics made a provision for goodwill impairment of about 80.16 million yuan and bad debt loss of 37.06 million yuan.
In the future, these low value-added LED lighting and channel businesses will no longer be the development focus of Shenzhen Fluence Technology Plc(300647) . From the company’s four-year investment plan before the new year and the disclosure of this annual report, the company will focus on the related fields of waste battery recycling and lithium battery cathode materials in the future, and the businesses such as consumer electronics heat dissipation accessories will move towards an expanded development strategy of multi-dimensional and multi fields on the basis of the present.
In addition to the foundation of PC and led, the heat dissipation business turns to the expansion and development strategy of multi-dimensional and multi fields. In the past, the company’s radiator business was mainly focused on PC cooling and LED cooling, with relatively limited coverage and profitability. The company’s previous fixed increase fund-raising was mainly invested in emerging applications, such as 5g base stations, various emerging intelligent terminals, VR / AR, ultra-thin notebooks, and even new energy sources such as power and energy storage. At present, the scale of incremental capacity has been gradually released, There are also new brand customers gradually introduced.
On the whole, relying on the advantages of mature heat dissipation technology, industrial design / manufacturing and leading position in the industry, it is quite feasible for Shenzhen Fluence Technology Plc(300647) ‘s heat dissipation solution to expand in the above-mentioned emerging fields. The key lies in the promotion speed of downstream customers’ channel end cooperation with specific products. With Shenzhen Fluence Technology Plc(300647) continuing to explore downstream emerging application fields, the growth margin of the company will continue to expand, Moreover, it is also possible to import some well-known large customers in the industry. We predict that in the future when the impact of LED low value-added channel business is gradually reduced, the heat dissipation business will become the main profit contribution point of Shenzhen Fluence Technology Plc(300647) electronics side, and the growth is expected.
Lithium ion battery cathode materials accelerate the expansion of production, and the scale effect is just around the corner. After the holding of shengbihe in August last year, the lithium battery cathode material business of the company was consolidated for the first time in the fourth quarter. 2022 will be the year when shengbihe will truly consolidate throughout the year.
The global demand for 5g battery and smart devices will continue to grow rapidly, and the global demand for 5g battery will continue to grow. In particular, as a major producer and consumer of new energy vehicles in the world, China is expected to have a compound annual growth rate of 42% (GGII) for power lithium batteries from 2020 to 2025. However, due to channel supply, upstream resources, epidemic situation and other factors, the supply of ternary cathode key materials is tight, and the price continues to soar.
Shengbihe, as one of the few enterprises in China with the production capacity of the complete industrial chain of “comprehensive recycling of waste lithium-ion battery materials precursor / lithium carbonate cathode materials”, has deeply benefited from this industry background. Before the Chinese new year, the company launched a four-year plan to invest 5 billion to build a production base for key materials of lithium battery cathode. This time, the fixed increase of 220 million yuan is the first phase of the planned project (900 million investment, and the rest will be solved by the local government and the company). If the progress is successful, the phase I project is expected to reach production in the middle of next year. The total production capacity of shengbihe will reach 15000 tons of ternary cathode material, 5000 tons of ternary precursor, and thousands of tons of lithium carbonate, lithium cobalt oxide and lithium manganate. According to the current market price, the scale of operating revenue corresponding to the capacity of this scale is billions. Therefore, there is considerable room for large-scale growth of ternary cathode key materials from shengbihe in 2022.
In addition, on March 14, Shenzhen Fluence Technology Plc(300647) also announced that it would implement equity incentive to some directors, senior executives and core employees of shengbihe by directly increasing capital and shares of shengbihe through the shareholding platform. This equity incentive scheme shows the firm confidence of the management in the company’s sustained and high growth in the future. At the same time, it also helps the company build a healthy ecosystem and lay a solid foundation for the future high-speed development.
Profit forecast and rating: maintain the buy rating. Based on the traditional heat dissipation devices, the company gradually shrinks the low value-added business of LED traditional lighting, deeply cultivates the emerging heat dissipation application fields such as 5g base station, intelligent terminal, power vehicle and energy storage, and rhythmically shifts the business focus to the key materials of lithium battery cathode (lithium carbonate cathode material, the precursor of waste battery recycling), There is no doubt that the treatment of waste batteries and the supply of key materials in the industry will have better growth potential in the next few years. The company will gradually realize the development path of large-scale strategic layout of lithium cathode material industry in the future. We estimate that the company’s profits from 2022 to 2024 will be 67 million yuan, 187 million yuan and 373 million yuan respectively, and the corresponding valuations of the current market value are 58.49, 20.87 and 10.49 times respectively, maintaining the company’s buy rating.
Risk tips: (1) the company’s lithium battery cathode material expansion is not as expected; (2) The price of upstream and downstream materials fluctuated sharply, resulting in changes in the company’s growth assumptions; (3) Traditional LED lighting business dragged down more than expected, resulting in continued losses in local businesses; (4) Industry competition intensifies
