\u3000\u30003 China Zhenhua (Group) Science & Technology Co.Ltd(000733) 00073)
Event overview. On March 30, 2022, the company released its annual report for 2021. The annual revenue of the company was 8.258 billion yuan, a year-on-year increase of 159.41%, the net profit attributable to the parent was 1.091 billion yuan, a year-on-year increase of 183.45%, and the net profit after deduction was 824 million yuan, a year-on-year increase of 238.28%. The company’s annual gross profit margin was 18.24%, a year-on-year decrease of 1.4pct, and the net profit margin was 13.2%, a year-on-year increase of 1.0pct. During the period, the expense rate was 6.7%, a year-on-year decrease of 3.2pct.
21q4 performed well. Revenue and net profit: the company’s 2021q4 revenue was 3.086 billion yuan, a year-on-year increase of 167.2%, a month on month increase of 41.4%, the net profit attributable to the parent company was 364 million yuan, a year-on-year increase of 202.16%, a month on month increase of 29.6%, and the net profit after deduction was 310 million yuan, a year-on-year increase of 17 times and a month on month increase of 38.9%. Gross profit margin: the gross profit margin of 2021q4 was 16.3%, year-on-year -2.2pct and month on month -0.6pct. Net interest rate: the net interest rate of 2021q4 was 11.8%, year-on-year + 1.1pct, month on month -1.0pct. During the period of 21q4, the expense rate was 5.8%, with a year-on-year decrease of 7.1pct and a month on month increase of 1.0pct. The expense was well controlled.
Capacity growth has entered the fast lane, and the level of customer diversification and internationalization is high. In the whole year of 21, 47200 tons were shipped, including 43600 tons of Sanyuan and 3600 tons of lithium cobaltate, maintaining the state of full production and full sales. We expect the production capacity to reach more than 70000 tons in 22 years. Considering some outsourcing, the actual shipment is expected to be more. The production expansion of 50000 tons of high nickel cathode and 20000 tons of consumer cathode previously announced by the company has been carried out steadily, superimposed with 100000 tons of production capacity in Europe, and the long-term planned production capacity is close to 300000 tons. In terms of customers, the Cr5 of the company in 21 years is 43%, mainly including SK, LG, Yiwei and North American customers, with high quality structure and strong diversity; Overseas revenue accounted for 33% in 21 years, and the joint venture capacity layout in Europe, South Korea and other places is expected to further strengthen the relationship with overseas customers in the future.
The new integration is advancing steadily, with the layout of solid-state battery cathode and LFP. The company has signed strategic cooperation agreements with Zhongwei and Huayou to ensure the supply of raw materials, closely bind and bring new integration. Relying on the Mining Research Institute and leading technology, the company cooperates with SK and Zhongwei in the field of lithium iron phosphate to develop high-performance LFP and LMFP materials, which are expected to be shipped quickly to meet the needs of energy storage and electric vehicles. Previously, the company announced that it would supply no less than 25000 tons of solid-state lithium battery materials to blue, which is expected to take the lead in shipping solid-state lithium battery cathode materials.
The performance of Zhongding high tech is steadily improving. Zhongding hi tech intelligent equipment business shipped 3287 sets in 21 years, with a year-on-year increase of 52.53%, realized a revenue of 191 million yuan, with a year-on-year increase of 21%, a net profit attributable to the parent company of 48 million, with a year-on-year increase of 16%, and a net interest rate of 25%, which was basically the same year-on-year. Its die-cutting equipment has entered the supply chain of international first-line consumer electronics manufacturers. Its end customers include international well-known brands such as Samsung, apple, Huawei and Xiaomi, which are applied in many fields.
Investment suggestion: we estimate that the net profit attributable to the parent company from 2022 to 2024 will be RMB 1.559 billion, RMB 2.261 billion and RMB 2.384 billion, with a simultaneous increase of 42.9%, 45.1% and 5.4%. The current share price corresponds to 26, 18 and 17 times of PE from 2022 to 2024 respectively. Considering that the company is a leading enterprise of positive pole, the production capacity growth is accelerated, the new integrated layout is deepened, and the “recommended” rating is maintained.
Risk tip: the sales volume of terminal new energy vehicles is lower than expected; The speed of production expansion is lower than expected; Competition for cathode materials has intensified.
