\u3000\u30003 China Zhenhua (Group) Science & Technology Co.Ltd(000733) 00073)
Key investment points
Event: the company released its annual report for 2021. In 2021, it realized an operating 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%; The net profit deducted from non parent company was 824 million yuan, with a year-on-year increase of 238.28%. In the fourth quarter of 2021, the operating revenue reached 3.086 billion yuan, a year-on-year increase of 167.15% and a month on month increase of 41.37%; The net profit attributable to the parent company was 364 million yuan, an increase of 202.16% year-on-year and 30.00% month on month; The net profit deducted from non parent company was 310 million yuan, with a year-on-year increase of 176180% and a month on month increase of 39.01%. Performance exceeded expectations.
Production and marketing: the scale of core business continues to expand, and the market share of overseas high-end market continues to rise. During the reporting period, the company’s lithium battery materials business produced 49700 tons, a year-on-year increase of 101.13%, and the sales volume was 47200 tons, a year-on-year increase of 96.68%. The shipment of high nickel products continued to increase. It is estimated that in the fourth quarter of 2021, the company’s product sales exceeded 16000 tons, with a month on month increase of about 15%, realizing full production and full sales. In 2021, the company exported 16800 tons of diversified materials and lithium cobalt oxide, accounting for more than 35%. It has established strong cooperative relations with global first-line power battery suppliers such as skon, LG Chemical and AESC, and realized the export of power cathode materials to Japan, South Korea, Europe and the United States at the same time.
Accelerate the construction of global production capacity and support the rapid expansion of business. During the reporting period, when the 20000 ton capacity of Changzhou dangsheng phase I project was completed, the company quickly reached the production capacity and realized full load operation. Meanwhile, the company has started the capacity construction of 50000 tons of high nickel multi-element materials in Changzhou dangsheng phase II project and 20000 tons of small lithium battery cathode materials in Jiangsu dangsheng phase IV project. Changzhou dangsheng phase II project has completed some construction of civil engineering and procurement of main equipment. It is expected that the whole project will be gradually put into use in the second half of 2022. In 2021, the company’s diversified material capacity was 44000 tons, and the capacity utilization rate reached 113%. It is expected that the new capacity will be put into operation rapidly in 2022, and the shipment volume will reach 100000 tons.
Join hands with Zhongwei and Huayou to deepen the integrated layout. In November 2021, the company announced that it had signed strategic cooperation agreements with Cngr Advanced Material Co.Ltd(300919) and Zhejiang Huayou Cobalt Co.Ltd(603799) respectively. From 2022 to 2025, it plans to purchase 500000 ~ 650000 tons of precursors from the two companies, and the supply of precursors is expected to be fully guaranteed. At the same time, the company and strategic partners jointly develop upstream mine resources, and plans to jointly develop 60000 tons of nickel product production line in the first phase. In addition, the company and Cngr Advanced Material Co.Ltd(300919) jointly built a supporting project for the development of iron phosphate, lithium iron phosphate and related phosphorus resources of no less than 300000 tons / year in Guizhou. The medium and long-term lithium iron phosphate business of the company is expected to become a new growth pole of performance and realize “two wings flying together”.
From January to February 2022, menstruation will be better. According to the company’s announcement, from January to February 2022, the company achieved an operating revenue of about 2.348 billion yuan, a year-on-year increase of 202%; The net profit attributable to the parent company was about 230 million yuan, with a year-on-year increase of 114%, and the performance was brilliant. It is estimated that the company’s 22q1 shipment is expected to reach 20000 tons. If the net profit per ton reaches 16000 yuan, the quarterly net profit will be 320 million yuan.
Profit forecast and investment suggestions. It is estimated that the company’s EPS from 2022 to 2024 will be 3.22 yuan, 4.79 yuan and 6.92 yuan respectively, and the net profit attributable to the parent company will maintain a compound growth rate of 48% in the next three years. The company has excellent customer structure, binding upstream, strong certainty of shipment and profitability, and maintains the “buy” rating.
Risk tips: risk of sharp fluctuations in raw material prices, exchange rate fluctuations, lower than expected capacity construction, overcapacity and increased industry competition.
