\u3000\u3 Guocheng Mining Co.Ltd(000688) 388 Guangdong Jiayuan Technology Co.Ltd(688388) )
Event:
Guangdong Jiayuan Technology Co.Ltd(688388) issue the annual report for 2021. In 2021, the company achieved a revenue of RMB 2.804 billion, a year-on-year increase of + 133.26%, a net profit attributable to the parent of RMB 550 million, a year-on-year increase of + 195.02%, a deduction of non attributable net profit of RMB 497 million, a year-on-year increase of + 203.54%, and a basic earnings per share of RMB 2.38, a year-on-year increase of + 193.83%.
Key investment points:
Optimize the profit structure and increase both volume and profit. In terms of products, the company’s revenue of lithium battery copper foil and standard foil in 2021 was 2.519285 billion yuan, a year-on-year increase of + 133.6% / 130.2%, accounting for 89.8% / 10.2%, and the gross profit margin was 30.23% / 28.23%, a year-on-year increase of + 4.34pct/18.37pct. In 2021, the output of copper foil (≤ 6 microns) and copper foil (> 6 microns) were 186 / 9500 tons respectively, with a year-on-year increase of + 170.37% / 15.17%. The sales volume and proportion of high gross profit copper foil (≤ 6 microns) increased significantly. In 2020, the net profit attributable to the parent company per ton of copper foil was 11700 yuan / ton, benefiting from the improvement of product structure. In 2021, the net profit attributable to the parent company per ton of copper foil was 19800 yuan / ton, a year-on-year increase of + 69.9%.
Extremely thin and ultra-thin copper foil has high technical barriers and high customer concentration. Compared with copper foil, the energy density can be increased by 10.5-4 microns. The company maintained a high growth rate in R & D investment. In 2021, the R & D investment was 147 million yuan, a year-on-year increase of + 103%. There were 235 R & D personnel, a year-on-year increase of + 158%, accounting for + 7.12 PCT, and 51 new patents were obtained. At present, only two companies in China have achieved mass production of 4.5 micron copper foil, with high technical barriers and tight supply and demand. In 2021, the company’s top five customers accounted for 83.98%, with a year-on-year increase of + 2.72pct, of which Contemporary Amperex Technology Co.Limited(300750) sales accounted for 54.89%, with a year-on-year increase of + 10.57pct.
The market supply and demand is tight, and the company expands its production rapidly. At the beginning of 2021, the original capacity of the company was 21000 tons, and the new capacity of Shandong Jiayuan after acquisition was 5000 tons. At the end of the year, the first 5000 ton production line of Baidu 15000 ton project was put into operation, with a total capacity of 31000 tons and a total annual output of 28000 tons, a year-on-year increase of + 85.7%. At present, the projects under construction include 16000 + 15000 tons of Baidu, 15000 tons of Ningde, 20000 tons of Jiangxi and 30000 tons of Shandong Jiayuan phase II. It is expected to be put into operation from 2022 to 2023. The follow-up planning projects are 100000 tons jointly invested with Contemporary Amperex Technology Co.Limited(300750) and 50000 tons in Meizhou, with a total planned capacity of 272000 tons. With the gradual release of 31000 tons of Baidu production capacity, it is expected that the effective production capacity of Q1 will be 9000 tons in 2022 and 55000 tons in the whole year.
Profit forecast and investment rating: benefiting from the rapid expansion of the company’s copper foil production capacity, it is estimated that the company’s operating revenue from 2022 to 2024 will be 5.68 billion yuan, 9.89 billion yuan and 14.86 billion yuan, and the net profit attributable to the parent company will be 1.02 billion yuan, 1.9 billion yuan and 2.87 billion yuan. The current stock price corresponds to PE of 21x, 1x and 8x. It is rated as “buy” for the first time.
Risk tip: the sales volume of new energy vehicles is lower than expected, the downstream demand is lower than expected, the speed of capacity expansion is lower than expected, the industry competition is intensified, and the penetration growth of ultra-thin copper foil is lower than expected.
