\u3000\u3 Guocheng Mining Co.Ltd(000688) 779 Hunan Changyuan Lico Co.Ltd(688779) )
Event overview. On March 29, 2022, the company released its annual report for 2021. The annual revenue of the company was 6.841 billion yuan, a year-on-year increase of 240.25%, the net profit attributable to the parent was 701 million yuan, a year-on-year increase of 538.2%, and the net profit after deduction was 682 million yuan, a year-on-year increase of 753.4%. The annual gross profit margin of the company was 16.9%, with a year-on-year increase of 2.4pct, and the net profit margin was 10.2%, with a year-on-year increase of 4.7pct. The expense rate during the period was 5.3%, a year-on-year decrease of 4.3pct. Previously, the company released the performance forecast of 22q1, with the expected revenue of RMB 3.35-3.45 billion, an increase of 175.77% – 184.00% and the net profit attributable to the parent company of RMB 280320 million, a year-on-year increase of 143.00% to 177.72%.
21q4 performed well. Revenue and net profit: the company’s 2021q4 revenue was 2.305 billion yuan, a year-on-year increase of 145.70%, a month on month increase of 36.61%, the net profit attributable to the parent was 214 million yuan, a year-on-year increase of 183.7%, a month on month increase of 23.2%, and the net profit after deduction was 209 million yuan, a month on month increase of 23.4%. Gross profit margin: 2021q4 gross profit margin was 13.98%, year-on-year -0.96% and month on month -3.55%. Net interest rate: the net interest rate of 2021q4 was 9.27%, 1.24% year-on-year and – 1.01% month on month. During the period of 21q4, the expense rate was 3.8%, with a year-on-year decrease of 3.1pct and a month on month decrease of 1.7pct. The expense was well controlled.
LFP + Ternary production capacity increased rapidly to meet customer needs. The company’s sales volume in 21 years was 42000 tons, with a year-on-year increase of 159%. The company’s high-tech base phase I, Lugu and Tongguan have formed a total of 80000 tons of ternary cathode production capacity. We expect that the production and sales will be full in 22 years. At the same time, the production capacity of 60000 tons of LFP will advance steadily. It is expected to start contributing revenue this year, and the production capacity of 40000 tons of high-tech base phase II is also progressing smoothly. The company’s customers include Contemporary Amperex Technology Co.Limited(300750) , Eve Energy Co.Ltd(300014) , Byd Company Limited(002594) , Sunwoda Electronic Co.Ltd(300207) and Farasis Energy (Gan Zhou) Co.Ltd(688567) , which will fully benefit from the growth of customer sales.
Backed by Minmetals, the integrated layout is promoted. The company is a platform company for the development of positive new energy materials of Minmetals Group. As a secondary unit, the group can provide support and resource guarantee to the company in terms of nickel cobalt lithium resources and ternary precursors. The subsidiary Jinchi material has a precursor production capacity of 20000 tons, with an annual output of 29000 tons in 21 years. All of them are self supplied. Jinchi has the mass production capacity of ncm523, ncm622, ncm811, NCA and other precursors, and it is possible to further improve the precursor self supply rate in the future.
The company’s cost control ability is leading. From the perspective of single ton cost of products, the company is superior to comparable companies, and is at the lowest level in the industry in terms of ton material cost, ton manufacturing and labor cost. The company’s new generation 65 series high-voltage single crystal cobalt reduction products break the traditional process and adopt low-cost coarse particle lithium source, which greatly improves the production capacity while reducing the cost. The cost of low cobalt ni83 single crystal products is significantly lower than that of the first generation products, and the ton sample has passed Contemporary Amperex Technology Co.Limited(300750) test.
Investment suggestion: we expect the company to realize the net profit attributable to the parent company of RMB 1.312 billion, 2.052 billion and 2.580 billion in 22-24 years, with a year-on-year growth rate of 87%, 57% and 26%. The current share price corresponding to PE is 28, 18 and 14 times respectively. Considering that the company is in a high-quality track, with significant integration advantages and cost control significantly better than the industry average level, we maintain the “recommended” rating.
Risk tip: the sales volume of new energy vehicles is lower than expected; The progress of capacity expansion is less than expected; Price fluctuation of raw materials; Industry competition intensifies; Risk of large customer concentration.
