\u3000\u30003 China Zhenhua (Group) Science & Technology Co.Ltd(000733) 00073)
In 2021, the company realized a net profit attributable to the parent company of 1.091 billion yuan, with a year-on-year increase of 183.45%, in line with market expectations. In 2021, the company’s revenue was 8.258 billion yuan, a year-on-year increase of 159.41%; The net profit attributable to the parent company was 1.091 billion yuan, a year-on-year increase of 183.45%; Deduct non net profit of 824 million yuan, a year-on-year increase of 238.28%. In 2021, the net profit attributable to the parent company in Q4 was 364 million yuan, a significant increase of 29.62% month on month. In 2021, Q4 company achieved a revenue of 3.086 billion yuan, an increase of 167.15% year-on-year and 41.39% month on month; The net profit attributable to the parent company was 364 million yuan, with a year-on-year increase of 202.16% and a month on month increase of 29.62%. In terms of profitability, Q4 gross profit margin was 16.34%, down 2.19 PCT year-on-year and 0.56 PCT month on month; The net interest rate attributable to the parent company was 11.78%, with a year-on-year increase of 1.36 PCT and a month on month decrease of 1.07 PCT; The non net interest rate deducted in Q4 was 10.03%, with a year-on-year increase of 8.59pct and a month on month decrease of 0.18pct.
In 2021, the production and sales will be full, and the positive business volume will rise simultaneously. The high growth in 2022 is expected to be maintained. The company shipped 47200 tons of lithium battery materials in 2021, a year-on-year increase of 97%, of which Q4 shipments are expected to be 15000 tons, a month on month increase of 15%. In 2022, we expect to ship 16000 tons + in Q1, an increase of 5-10% month on month. In the whole year, we expect to ship 9 Shenzhen Ecobeauty Co.Ltd(000010) 0000 tons, a year-on-year increase of double. In terms of profitability, the company deducted 16000 yuan / ton of non single ton net profit in 2021, with a year-on-year increase of about 25%. Among them, we expect the company to deduct nearly 20000 yuan / ton of non single ton net profit in 21q4, with a month on month increase of 20%. The company has a stable lithium carbonate supply channel, and the proportion of high nickel in 22 years is expected to further increase. The profit is expected to maintain a high level and continue to increase.
Steady progress was made in production expansion, integrated layout was improved, and iron lithium production capacity was steadily promoted. The company has an effective capacity of 44000 tons in 2021. At present, the capacity of 20000 tons in Jiangsu phase IV and 50000 tons in Changzhou phase II are under construction. The company expects Changzhou phase II to be put into operation in the second half of 2022. Considering the elasticity of outsourcing capacity, we estimate that the company’s shipment in 2022 can reach 9 Shenzhen Ecobeauty Co.Ltd(000010) 0000 tons, an increase of 80% year-on-year. The company’s existing production capacity is planned to reach 200000 tons +, and the company and SK have agreed to set up a lithium battery cathode material factory in overseas joint venture, accelerating the expansion of production capacity. The company has carried out strategic cooperation with Huayou and Zhongwei to ensure the supply of raw materials and improve the integrated layout. In addition, the company has increased the capacity layout of lithium iron phosphate and invested in the construction of 300000 tons of lithium iron phosphate integrated chemical plant in Guizhou. The phase I project has entered the project approval stage.
Complete the technical card position and layout the solid-state battery and lithium manganese iron phosphate materials. The company’s technological research and development advantages are leading. The reunion single crystal composite high nickel products continue iterative development, and a new generation of high-end models from international customers are introduced in batches. Ni95 and ni98 products have entered the verification stage, and their performance has reached the international leading level. The company’s solid-state lithium battery materials were successfully imported into Ganfeng lithium battery, Weilan new energy and other solid-state battery customers, and obtained an intention order of no less than 25000 tons of solid-state lithium battery materials from Weilan new energy. In addition, the development of lithium rich manganese based products and lithium manganese iron phosphate materials of the company is progressing smoothly, and the customer evaluation results are good.
Profit forecast and investment rating: as the downstream prosperity continues to exceed market expectations, we revised up the net profit attributable to the parent company from 2022 to 2024 to RMB 1.678/23.00/3.059 billion (originally expected to be RMB 1.606/2.269 billion), with a year-on-year increase of 54% / 37% / 33%, corresponding to PE of 24 / 17 / 13X respectively. We gave 40 times PE in 2022, corresponding to the target price of RMB 132.4, and maintained the “buy” rating.
Risk tip: the policy is less than expected, the sales volume of electric vehicles is less than expected, and the competition is intensified.
