\u3000\u3 Guocheng Mining Co.Ltd(000688) 005 Ningbo Ronbay New Energy Technology Co.Ltd(688005) )
Event: the company released its annual report for 2021. In 2021, it realized an operating revenue of 10.259 billion yuan, a year-on-year increase of 170.36%; The net profit attributable to the parent company was 911 million yuan, a year-on-year increase of 327.59%; The net profit deducted from non parent company was 808 million yuan, with a year-on-year increase of 404.73%. In the fourth quarter of 2021, the operating revenue reached 4.008 billion yuan, an increase of 176.62% year-on-year and 50.73% month on month; The net profit attributable to the parent company was 362 million yuan, an increase of 263.81% year-on-year and 58.77% month on month; The net profit deducted from non parent company was 339 million yuan, with a year-on-year increase of 380.87% and a month on month increase of 65.37%. The performance slightly exceeded expectations.
The volume and price of 21q4 increased simultaneously, and the sales continued to improve in 2022. The company’s customer demand continued to be strong, the integration process was steadily promoted, and the positive business achieved both volume and profit in 21q4. It is estimated that the company’s 21q4 shipment volume is about 19000 tons, with a month on month increase of about 36%, corresponding to a net profit of 18000 yuan / ton, with a month on month increase of about 25%. According to the data of battery alliance, the output of ternary lithium battery in China from January to February 2022 was 22.5gwh, with a year-on-year increase of 88%, still showing a certain increase compared with November to December 2021. We expect that the operation of 22q1 company will improve month on month with the industry, and the sales of cathode materials will be 22000 ~ 23000 tons. At the same time, affected by the price rise of nickel, cobalt and lithium in the upstream, the price transmission is relatively lagging, and the net profit per ton is under pressure. The neutral expectation is that the net profit per ton will be adjusted back to 21q3 level in the short term (14600 yuan / ton), and the corresponding net profit attributable to the parent company in 22q1 is about 330 million yuan.
The company actively promotes capacity layout and serves strategic customers. In 2021, the company also expanded the high nickel cathode production capacity in Hubei, Guizhou and South Korea, increasing the high nickel production capacity from 40000 tons / year at the beginning of the year to 120000 tons / year. According to the company’s disclosure, the investment cost per 10000 tons gradually decreased during the year, and the advantages of equipment development and production line design were highlighted. In order to meet the growing needs of strategic customers, the company continues to actively expand its production. It is expected to build a 250000 T / a cathode capacity by the end of 2022 and a Shanghai Pudong Development Bank Co.Ltd(600000) T / a cathode capacity by the end of 2025, forming four cathode bases in Ezhou, Hubei Xiantao, Guizhou Zunyi and Zhongzhou, South Korea.
The annual self power is increased, and the integration strategy is expected to reduce costs and increase profits. During the reporting period, the company’s precursor business turned losses into profits. Both single crystal and polycrystalline high nickel precursors achieved large-scale production and successfully entered the high-end power battery industry chain. In 2021, the sales volume of precursors increased by 200% year-on-year and the self supply rate to the positive electrode increased to 34%. In addition, the company has actively arranged recycling business to realize industrial cycle and cost reduction. Through investment and self construction, the company has arranged lithium battery recycling business, has established “capital + business” cooperation with Gem Co.Ltd(002340) and obtained the priority supply right accounting for 26% of its total output of recycled raw materials through equity investment. By broadening the channels of raw materials, realize the circulation of industrial chain and reduce the comprehensive cost of ternary materials.
It is deeply bound to upstream and downstream enterprises, with strong performance certainty. In terms of procurement strategy, for major raw materials such as nickel, cobalt, manganese and lithium, the company has established long-term cooperative relations with Ganfeng lithium, Yabao, Gem Co.Ltd(002340) , Tianqi Lithium Corporation(002466) , Zhejiang Huayou Cobalt Co.Ltd(603799) and other well-known raw material suppliers at home and abroad, forming a list of qualified suppliers with relatively stable, appropriate competition and dynamic adjustment, ensuring the continuous stability of raw and auxiliary material supply, excellent quality and reasonable price. In addition, the company has signed Contemporary Amperex Technology Co.Limited(300750) a strategic cooperation agreement with the world’s leading power battery enterprises, specifying that the company will be the first supplier of ternary cathode powder from 2022 to 2025. At the same time, Farasis Energy (Gan Zhou) Co.Ltd(688567) , honeycomb energy, Weilai automobile, blue battery and other important customers have also signed strategic cooperation agreements with the company.
Profit forecast and investment suggestions. It is estimated that the company’s EPS from 2022 to 2024 will be 3.90 yuan, 7.31 yuan and 10.72 yuan respectively, and the net profit attributable to the parent company will maintain a compound growth rate of 74% in the next three years. Considering that the prices of nickel, cobalt and lithium raw materials in the upstream will rise sharply in 2022, the industry is still in the stage of price game and maintains the “hold” rating.
Risk tips: the risk of raw material price or sharp fluctuation, the risk of capacity expansion and insufficient utilization, the risk of management caused by rapid expansion, the risk of intensified market competition, the risk of market demand fluctuation, and the risk of industrial technical route change.
