\u3000\u3 Shengda Resources Co.Ltd(000603) 612 Sunstone Development Co.Ltd(603612) )
Event: on April 7, 2022, the company announced its entry into lithium battery cathode materials. The company will invest in the first phase of the 200000 ton lithium ion battery cathode material integration project in Jiabei Industrial Park, Jiayuguan City, Gansu Province. The construction period is expected to be 12 months. The total investment of the project is about 720 million yuan, and the source of funds is the company’s own and self raised funds. On April 4, 2022, the company won the bid for 770mw photovoltaic project, which may solve the problem of power supply of lithium battery cathode materials.
Lithium battery cathode materials are in a period of rapid development. Cutting into carbon cathode may enable the company to find a new profit growth point. Anode materials have an important impact on the performance of lithium batteries, mainly graphite anode materials. Negative electrode material is one of the four key materials of lithium battery, accounting for about 10% of the cost of lithium battery. Benefiting from the rapid development of lithium battery industry under the background of double carbon, the supply of carbon cathode materials is in short supply. According to SMM, the price of high-end artificial graphite in 2021q1 is 79647 yuan / ton, up 5.2% month on month and 17.3% year-on-year.
The company’s core advantages in cutting into artificial graphite cathode materials lie in petroleum coke and green electricity. The raw material and graphitization account for the highest cost of artificial graphite, which is the core of cost reduction. ① Petroleum coke: the company has the advantage of petroleum coke procurement. A single ton of prebaked anode consumes 1.09 tons of petroleum coke. Based on the current production capacity of 2.52 million tons of prebaked anode, the company theoretically needs to purchase 2.75 million tons of petroleum coke every year. In 2021, the national petroleum coke output was 30.295 million tons. The petroleum coke purchased by the company accounts for 9% of the national output, which has a significant procurement advantage. The first phase of the negative electrode material project of the company is 50000 tons or only 71400 tons of petroleum coke, which is far less than the consumption of pre baked anode. ② Green power: the company’s photovoltaic projects ensure low-cost power supply, and carbon trading may further increase profits. Graphitization is one of the core steps in the artificial graphite process. The power consumption per ton is 13000 kwh, and the power cost accounts for 53% of the total cost of graphitization. It is a high energy consuming process. The company won the bid for Gansu Jiayuguan 770mw photovoltaic green power project. Considering that Jiayuguan is a photovoltaic class I resource area and the average annual power generation hours are more than 1500 hours, the project can cover the power consumption of 100000 tons of negative electrode materials. In addition, with the power trading entering the carbon trading market, the trading value of carbon emission rights brought by the company’s 770mw photovoltaic green power project may reach 53.28 million yuan, further increasing profits.
The business volume and price of prebaked anode increased simultaneously. On the one hand, the company’s pre baked anode production capacity has increased steadily. It is estimated that the company’s production capacity from 2022 to 2023 will be 252 / 3.17 million tons respectively. The company will build Shanghai Pudong Development Bank Co.Ltd(600000) tons of sotong Yunnan Aluminum (phase I), which will be completed at the end of June 2021, and conduct trial production in Q4 of 2021. It will contribute to the profit increment in 2022. In addition, the 300000 tons of sotong Yunnan Aluminum (phase II) was started in September 2021, and the 350000 tons capacity of sotong Yuheng is also in the process of preparation. On the other hand, the price of prepared anode has accelerated recently. According to our calculation, as of April 8, 2022, the net profit per ton of pre baked anode is 842 yuan / ton.
Investment suggestion: the prebaked anode industry is booming, the price rises rapidly, and the company’s production capacity continues to expand, the volume and price rise together, and the performance growth can be expected. The emerging lithium anode materials have synergistic effects with the traditional prebaked anode business. The development of new business may make the company more possible and open up the long-term growth space of the company. It is estimated that the company’s net profit attributable to the parent company from 2021 to 2023 will be 597 / 727 / 912 million yuan, EPS will be 1.30 / 1.58 / 1.98 yuan respectively, and the corresponding PE of share price on April 8, 2022 will be 16 / 13 / 10x respectively, maintaining the “recommended” rating.
Risk tip: the product price has fallen sharply, the project progress is not as expected, and the epidemic affects production and operation.
