\u3000\u3 China Vanke Co.Ltd(000002) 240 Chengxin Lithium Group Co.Ltd(002240) )
Event overview: the company announced on March 22 that it plans to introduce Byd Company Limited(002594) as a strategic investor by means of directional stock issuance. (1) The company plans to issue no less than 465224 million shares and no more than 697837 million shares to Byd Company Limited(002594) with an issue price of 42.99 yuan / share. The total amount of funds to be raised (including the issue cost) shall not exceed 3 billion yuan (including the principal amount). The net amount of funds raised after deducting the issue cost will be used to supplement working capital and repay debts. (2) After the completion of this offering, Byd Company Limited(002594) holds more than 5% of the company’s shares and will become the related party of the company Byd Company Limited(002594) the shareholding ratio of the company is expected to be no less than 5.10% and no more than 7.46%. The shares subscribed for this issuance will not be transferred within 36 months from the date of listing of these shares.
Analysis and judgment: multi field and all-round strategic cooperation, Shengxin and Byd Company Limited(002594) deep binding. According to the agreement, the cooperation between the two sides includes: 1) raw material purchase and sales cooperation: Shengxin enters the list of Byd Company Limited(002594) strategic cooperation suppliers, and the two sides will give priority to ensuring the procurement and supply of the other party and provide preferential prices; 2) Raw material processing cooperation: Byd Company Limited(002594) gives priority to entrusting Shengxin to process lithium resources, and Shengxin gives priority to ensuring Byd Company Limited(002594) ‘s lithium salt processing capacity; 3) Cooperative development of mineral resources: jointly look for high-quality mineral resources for cooperative development and obtain lithium resources; 4) Cooperation in technology and industrial chain resources; 5) Byd Company Limited(002594) has the right to nominate a non independent director to Shengxin to exercise his power.
Win win cooperation: Byd Company Limited(002594) can lock the source of raw materials, and Shengxin can obtain funds to further consolidate the resource layout. 1) For Byd Company Limited(002594) : competitors Ningde, GuoXuan and Yiwei have lithium resource layout in Jiangxi, Sichuan and Qinghai respectively. Although Byd Company Limited(002594) is earlier than friends and merchants (prospective layout of Chaerhan Salt Lake, Zabuye Salt Lake and cooperation with Youngy Co.Ltd(002192) etc.), the progress of resource development is significantly lower than expected (even the lithium resource auction in Chile failed), Byd Company Limited(002594) as a head battery enterprise, it is urgent to improve the resource self-sufficiency rate and cooperate with Shengxin or it is the best choice (with large-scale smelting capacity planning, potential resource layout and ambitious management); 2) To Shengxin: following the cooperation with LG, Ningde, etc., the cooperation with Byd Company Limited(002594) has further established its position in the industrial chain and ensured the future product sales; On the other hand, the company’s production capacity planning is ambitious, and the guarantee proportion of its own resources still needs to be improved. This financing can solve the capital problem of production capacity expansion, or even provide sufficient funds for the company’s further resource layout and M & A. the company is expected to enter the fast lane of development.
Enlightenment to the industrial chain: the strategic position of upstream lithium resources is further highlighted, the integration of the industrial chain may become a trend, and the upstream enterprises may get rid of the cyclical attribute and usher in the strategic revaluation. The mismatch between the supply growth rate of lithium resources and the demand growth rate has led to the prominent contradiction in the supply of lithium. In the future, the stable supply of electric vehicle materials is very important. Leading car manufacturers and battery enterprises are directly involved in the upstream resource layout. For example, Tesla, Volkswagen and BMW have already arranged to lock the upstream raw materials. Ningde, GuoXuan and Yiwei have also begun to practice the industrial chain integration strategy. Under the future integration, the price of lithium is expected to remain stable, Or guide the demand for new energy to develop better. Upstream enterprises may enjoy the high growth rate of the industry at the same time, get rid of the cyclical attribute, and enterprises participating in integration may usher in value revaluation.
Investment suggestion: we believe that under the current high lithium price, the performance of the company’s continuous expansion is expected to increase greatly. We raised the forecast of the company’s net profit attributable to the parent company from 2021 to 2023 to 885 million yuan, 3151 million yuan and 3634 million yuan. Based on the closing price on March 22, 2022, the corresponding PE is 53x, 15x and 13X respectively, maintaining the “recommended” rating of the company.
Risk tip: the demand is less than expected, the lithium price has fallen sharply and its own project is less than expected.
