\u3000\u3 Jointo Energy Investment Co.Ltd.Hebei(000600) 884 Ningbo Shanshan Co.Ltd(600884) )
Key investment points
China is a pioneer in lithium battery materials. In recent years, the focus cathode + polarizer has set sail again and returned to high growth. Founded in 1992, the company started from the clothing business and was listed on A-share market in 1996. In 1999, the company entered the lithium battery material industry, successively involved in various businesses such as negative electrode, positive electrode and electrolyte, and then carried out diversified operations such as new energy and investment and financing. Dragged down by diversified businesses, the company’s revenue stagnated and its net profit fell sharply from 2018 to 2020. Since 2020, the company has gradually stripped off its non core business and acquired the LCD polarizer business of LG Chemical, focusing on the two growth poles of lithium battery cathode + polarizer, with significant performance improvement. According to the company’s performance forecast, the median net profit attributable to the parent company in 2021 was 3.245 billion yuan, a year-on-year increase of 2252%. From January to February 2022, the company’s revenue was 3.214 billion yuan, an increase of 44% at the same time; The net profit attributable to the parent company was 566 million yuan, an increase of 313% with a bright performance growth.
Negative pole: the market share ranks among the top three in the industry, with capacity expansion + integrated cost reduction and high profit growth. From 2020 to 2021, the market share of negative electrode production of the company was 16% / 15%, ranking the second in the industry, second only to beiteri, and it is a leading negative electrode enterprise in China. Since 2020h2, the quarterly shipment of negative electrode has maintained a year-on-year growth rate of more than 40%. We expect that the shipment volume will be 9 Shenzhen Ecobeauty Co.Ltd(000010) 0000 tons in 2021, with a year-on-year increase of 65%, and it is expected to reach 160000180000 tons in 2022. In 2021, the company’s negative effective capacity will be 140000 tons. With the completion of Baotou phase II and Meishan phase I, we expect the effective capacity to rise to 200000 / 320000 tons from 2022 to 2023. Under the power restriction policy, the company actively arranges the graphitization capacity. In 2022, the graphitization capacity is expected to reach 94000 tons, and the proportion of self supply will reach 65%, giving full play to the advantage of integrated cost reduction. We expect the net profit per ton of negative pole of the company to reach 6000 yuan in 2021 and rise to 6 Faw Jiefang Group Co.Ltd(000800) 0 yuan in 2022.
Polarizer: the acquisition of LG polarizer business has jumped to the global leader of polarizer. In February 2021, the company acquired 70% equity of LG Chemical polarizer business and agreed to acquire the remaining shares in batches from 2021 to 2023. LG Chemical accounted for 25% of the global polarizer output in 2020, ranking first in the world. It has more than 1000 applied / registered polarizer patents and works closely with global head LCD manufacturers such as BOE, LG display and sharp. On the basis of LG’s existing capacity, the company plans to build four new production lines in Zhangjiagang and Mianyang to improve the capacity scale and maintain the leading edge. After the acquisition, the polarizer business operates well, accounting for 24% of the global market in 2021, ranking first; In 2021h1, we contributed 4.653 billion yuan of revenue and 514 million yuan of net profit attributable to the parent company. We expect to contribute 1-1.1 billion yuan of net profit attributable to the parent company in the whole year of 21, and 1.5-1.6 billion yuan of net profit attributable to the parent company in 22, with a year-on-year increase of 40%.
Other businesses: focus on the main business in recent years and realize stripping in succession. 1) In terms of lithium battery materials, the company transferred most of the equity of the cathode business to BASF in 2021, sold all the equity of the cathode material subsidiary in 2022, withdrew from the cathode market, and planned to divest the electrolyte business. 2) In terms of new energy, the company has completed the equity disposal of the energy storage business operation and maintenance subsidiary and plans to divest the photovoltaic business; 3) In terms of clothing and investment and financing, the company transferred the majority equity of Shanshan brand, a subsidiary of clothing business, in 2020, and sold the remaining equity of Fuyin financing, an investment and financing subsidiary, in August 2021. The divestiture of diversified businesses will help the company focus on the main business of cathode + polarizer and improve its cash flow.
Profit forecast and investment rating: in 2022, the company’s positive business will no longer be consolidated, and the performance growth mainly comes from the negative and polarizer business. We expect the company’s revenue from 2021 to 2023 to be 218.442452430.28 billion yuan, an increase of 166% / 12% / 23% at the same time; The net profit attributable to the parent company was RMB 3.027/3.270/4.273 billion, an increase of 2094% / 10% / 30% at the same time. The corresponding PE is 19.7 / 18.2 / 13.9 times respectively, which is given 30 times PE in 2022, and the corresponding target price is 47 yuan, which is given a “buy” rating.
Risk tip: the sales volume of electric vehicles is lower than expected, the price increase of raw materials is higher than expected, the price downside risk, and the production capacity of polarizer is lower than expected.
