\u3000\u30003 China Zhenhua (Group) Science & Technology Co.Ltd(000733) 00073.SZ)
Event: the company released its annual report for 2021, realizing a revenue of 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%; Net profit deducted from non parent company was 824 million yuan, with a year-on-year increase of 238.28%.
Comments:
The proportion of high nickel increased and the performance increased significantly. In 2021, the company’s cathode material sales totaled 47000 tons, with a year-on-year increase of 97%. Ni83, ni88 and ni90 high nickel were supplied in batches, and the gross profit per ton was 31900 yuan, with a year-on-year increase of 6400 yuan. From January to February 2022, the performance growth trend was continued, with a revenue of about 2.348 billion yuan, a year-on-year increase of about 202.21%, and a net profit attributable to the parent company of about 230 million yuan, a year-on-year increase of about 113.91%.
Accelerate the expansion of production capacity and enter the overseas market. By the end of 2021, the company’s own production capacity reached 44000 tons. In 2022, Changzhou dangsheng phase II 50000 tons project will be put into operation in the second half of the year; Jiangsu dangsheng phase IV 20000 ton small lithium battery cathode material project was actively promoted, and the first 100000 ton industrial base project in Europe was launched at the same time; The agreement established a joint venture factory with SK in South Korea or the United States, and the project entered the project approval stage.
Promote the construction of an integrated industrial chain and deeply bind the supply of resources. The company has expanded cooperation in resource development, product supply and marketing, industrial investment and other aspects, cooperated with Zhejiang Huayou Cobalt Co.Ltd(603799) to develop nickel cobalt resources, and purchased 30 China Tianying Inc(000035) 0000 tons of ternary precursors in 22-25 years; Build a 60000 gold ton nickel production line with Cngr Advanced Material Co.Ltd(300919) and plan an integrated industrial project of lithium iron phosphate with an annual output of more than 300000 tons. The company actively carried out forward-looking technical reserves, sold solid-state batteries in batches to Weilan new energy, and lithium manganese iron phosphate entered the customer certification. The development of lithium rich manganese base was smooth.
Profit forecast and investment rating: we expect the company’s revenue from 2022 to 2024 to be 19.236 billion yuan, 24.857 billion yuan and 33.557 billion yuan respectively, with a year-on-year increase of 132.9%, 29.2% and 35.0%; The net profit attributable to the parent company was 1.484 billion yuan, 2.047 billion yuan and 2.746 billion yuan respectively, with a year-on-year increase of 36.0%, 37.9% and 34.2%. The current share price corresponds to 25.67 and 18.61 times of PE from 2022 to 2023, respectively, maintaining the “buy” rating.
Risk factors: industry demand is less than expected risk; Price fluctuation risk of raw materials; Risks of new technology development.
