\u3000\u30 Shaanxi Zhongtian Rocket Technology Co.Ltd(003009) 19 Cngr Advanced Material Co.Ltd(300919) )
Events
Cngr Advanced Material Co.Ltd(300919) ( Cngr Advanced Material Co.Ltd(300919) ) recent announcement: 1) the company released the 2021 annual report, realizing revenue of 20.1 billion yuan / yoy + 170% and net profit attributable to parent company of 940 million yuan / yoy + 123%; 2) The company issued a restricted equity incentive plan.
Key investment points
The performance is in line with expectations, and the profit has entered the medium and long-term upward channel
In 2021q4, the company achieved a revenue of 6.2 billion yuan, yoy + 162% / QoQ + 12%, and a net profit attributable to the parent company of 174 million yuan, yoy + 24% / qoq-37.4%. The month on month decline in 2021q4 was mainly due to the rise of auxiliary materials and the provision of year-end bonus. In 2021, the company produced 23400 tons of Co3O4, with a gross profit margin of 9.2%, and 158300 tons of ternary precursor, with a gross profit margin of 12.3%. In 2021, the total sales volume of positive precursors of the company was 175700 tons / yoy + 93%, and the corresponding non-profit deduction per ton was 4400 yuan / ton. Although the company deducted non single ton profit in 2021q4 due to the rise of auxiliary materials and other factors, the overall company still increased compared with 3800 yuan / ton in 2020, the short-term impact remains unchanged, and the long-term trend is better.
We believe that the company will strengthen the integrated layout, and the phase I nickel project in Indonesia will be completed and put into operation in 2022q3. Through mineral resource processing → precursor → recycling, the company will create a closed-loop industrial chain, and its profits will enter the medium and long-term upward channel.
Prominent global position and positive capital expenditure to increase production capacity
With strong demand, the company has increased its capacity layout, and its capital expenditure in 2021 is about 5 billion yuan / yoy + 377%. By the end of 2021, the company’s projects under construction were 2.3 billion yuan / yoy + 280%, and its fixed assets were 4.4 billion yuan / yoy + 111%. The company has global capacity distribution in Hunan, Guizhou, Guangxi, Indonesia, Finland and other places, with an existing capacity of about 170000 tons and a capacity under construction of 180000 tons. It is estimated that the precursor capacity of the company will reach 350000 tons / 500000 tons in 2022 / 2023. In addition, the company continued to optimize the production capacity structure. On December 10, 2021, the company announced that it would cooperate with Kaiyang County Government to invest 10 billion yuan (including 5 billion yuan of working capital) to build 200000 tons of iron phosphate and lithium iron phosphate integrated project. In terms of customers, the company has deep and long-term cooperation with global leading customers such as dangsheng, Xiamen tungsten, Tesla and LGC, and the production capacity is expected to be actively digested.
The global position is prominent. In 2021, the total output of ternary precursor materials in the world will reach 750000 tons / yoy + 79%; The total output of ternary precursors in China is 620000 tons / yoy + 82%, and the total output of lithium cobaltate in China is 92000 tons / yoy + 24%. In 2021, the market share of the company’s ternary precursor increased to 26%, and the market share of Co3O4 was 24%, both of which remained the first in the industry.
We believe that the company’s prominent global position, together with excellent global customers and overweight cooperation with sungeelhitech of South Korea, Castle Peak of China, mining of Finland and other fields such as recycling, nickel and precursors, is expected to continuously improve its profitability and drive the continuous optimization of its balance sheet.
High standards for equity incentive assessment, highlighting medium – and long-term growth confidence
The company issued the draft restricted stock incentive plan, which plans to grant 6.05 million shares, accounting for 1% of the current total share capital. The grant object is 1113 people, accounting for 15.6% of the company’s employees in 2021. The proposed grant price is 63.97 yuan / share. In terms of assessment, the assessment standard in 2022 is: the income is 26 billion yuan / yoy + 30% or the net profit attributable to the parent company (deducting the cost of equity incentive) is 1.8 billion yuan / yoy + 92%; Assessment criteria for 2023: the accumulated income from 2022 to 2023 reaches 62.6 billion yuan or the accumulated profit reaches 4.8 billion yuan; Assessment criteria for 2024: from 2022 to 2024, the cumulative income reached 113.9 billion yuan or the cumulative profit reached 9.8 billion yuan. In this assessment, the CAGR of the revenue side from 2022 to 2024 is 37%, and the CAGR of the profit side from 2022 to 2024 is 75%, demonstrating the company’s medium and long-term confidence.
The company has achieved a comprehensive layout in the upstream nickel and other resource ends, precursors, iron and lithium, recycling and other fields, with a clear industrial layout. Focusing on the two core tracks of electric vehicles and energy storage, the company has made efforts to neutralize carbon, continuously reduce costs and increase both quantity and profit. The company attaches importance to talent training, retains excellent talents, and can expect sustained and rapid growth in the medium and long term.
Profit forecast
It is estimated that the net profit attributable to the parent company in 2022, 2023 and 2024 will be 2 / 33 / 4.8 billion yuan, EPS will be 3.15/5.12/7.45 yuan, and the corresponding PE will be 41 / 25 / 17 times respectively. Based on the company’s high-quality track, we embrace Tesla, LGC, ATL, dangsheng, Xiamen tungsten and other high-quality customers, have positive capital expenditure, the industrial layout is in line with the future development trend, and the talent incentive is in place. We are optimistic about the medium and long-term upward development opportunities of the company and maintain the “recommended” rating.
Risk tips
Policy fluctuation risk; Downstream demand is lower than expected; The product price is lower than expected; Risk of deterioration of competition pattern; Capacity expansion and digestion were less than expected.
