\u3000\u3 Guocheng Mining Co.Ltd(000688) 819 Tianneng Battery Group Co.Ltd(688819) )
Key investment points
Event: the company released its 2021 annual report. In 2021, it realized an operating revenue of 38.716 billion yuan, a year-on-year increase of 10.30%; The net profit attributable to the parent company was 1.369 billion yuan, a year-on-year decrease of 39.94%; The net profit deducted from non parent company was 1.036 billion yuan, a year-on-year decrease of 48.82%. The company achieved an operating revenue of 11.967 billion yuan in the fourth quarter of 2021, with a year-on-year increase of 20.34% and a month on month increase of 14.04%; The net profit attributable to the parent company was 304 million yuan, a year-on-year decrease of 62.70% and a month on month decrease of 22.84%; The net profit deducted from non parent company was 263 million yuan, a year-on-year decrease of 65.95% and a month on month decrease of 21.02%. The performance is lower than expected.
Lead battery business: the price of auxiliary materials has risen sharply, and the gross profit margin has been seriously damaged. During the reporting period, the company produced 102 million KVAh of lead-acid batteries and sold 0.93 KVAh. The sales volume increased by 10.33% year-on-year compared with last year, and the corresponding unit price was 362 yuan / KVAh, a slight increase compared with 2020. The company adjusted the settlement price of lead-acid battery by anchoring the lead price with downstream customers and dealers. Due to the sharp rise in the prices of auxiliary materials such as sulfuric acid, tin and ABS during the reporting period, the cost of lead-acid battery is difficult to be transmitted to the downstream, and the gross profit margin of lead-acid battery is significantly lower than that in the same period in history. It is expected that with the easing of the contradiction between supply and demand of raw materials in 2022, the price will return to the normal level, superimposed with the company or updated the settlement price model, the business gross profit margin will be restored to the historical average level. According to the white paper on the power system of electric tricycles, from 2021 to 2025, the average annual compound growth rate of sales of electric tricycles will reach 6.2%. As a leader in the industry, the company’s shipment is expected to grow slightly ahead of the industry in the future.
Lithium battery business: investment and production expansion are accelerated, and business growth is expected to accelerate. During the reporting period, the company produced 1.30gwh of lithium batteries and sold 1.61gwh, which was basically the same as the same period last year, and the inventory removal performance was good. Limited by the company’s production capacity and the sharp rise in the price of core raw materials (lithium carbonate, lithium hexafluorophosphate, etc.), the profitability of the company’s lithium battery business decreased slightly. However, in 2021, the company successfully completed the delivery of low-speed electric vehicle Haiquan, Jinzhi and other power battery products, and completed the orders of Jiangsu Xuxie new energy and France shuaifude energy storage. During the reporting period, the company accelerated the construction of lithium battery capacity, invested about 4 billion yuan to build lithium battery capacity of 10gwh / year, and plans to invest about 5.2 billion yuan to build energy storage and power battery projects with an annual output of 15gwh. At present, the company is actively expanding the capacity of lithium battery. In the future, with the gradual release of the company’s capacity, the growth of lithium battery business is expected to increase rapidly.
Hydrogen fuel cell: actively layout and realize industrialization. During the reporting period, the company’s fuel cell products have been mass produced and shipped, realizing revenue, marking the deepening and steady progress of this industrialization process. Based on the establishment of hydrogen fuel cell related companies, the company actively carried out industry university research cooperation and successively obtained 23 patents. In terms of industrialization, the company signed strategic cooperation agreements with Nanjing Jinlong, XCMG group, Geely Automobile and other manufacturers. Among them, the co-produced Kaiwo bus and remote brand bus have been listed in the product catalogue of the Ministry of industry and information technology, marking the successful commercialization of the company’s hydrogen fuel cell.
Profit forecast and investment suggestions. It is estimated that the company’s EPS from 2022 to 2024 will be 2.09 yuan, 3.03 yuan and 4.34 yuan respectively, and the net profit attributable to the parent company will maintain a compound growth rate of 46% in the next three years. Considering that the profitability of the company’s traditional business will pick up and the safety cushion will be stable in 2022, the lithium battery business will rise with the production capacity, which is expected to turn around the loss, and there will be a big turning point in the performance. Give the company 20 times PE in 2022, corresponding to a market value of 40.7 billion yuan. The recent correction of the company’s share price is deep, and the loss expectation has been fully reflected. Considering the improvement of future performance, it was raised to the “buy” rating.
Risk tips: the risk of raw material prices or sharp fluctuations, the risk of unexpected capacity construction, the risk of new product technology substitution, and the risk of significant changes in upstream and downstream cooperation.
