\u3000\u3 Shengda Resources Co.Ltd(000603) 906 Jiangsu Lopal Tech.Co.Ltd(603906) )
Performance
On April 9, the company released its annual report. In 2021, the company achieved an operating revenue of 4.05 billion yuan, a year-on-year increase of 112%, and a net profit attributable to the parent company of 350 million yuan, a year-on-year increase of 73%.
Analysis
In the fourth quarter, lithium iron phosphate was still in a state of insufficient supply, which led to a significant increase in the company’s product profits. The company had previously issued a pre increase announcement in 2021. The performance was close to the range online. Driven by the lithium iron phosphate business, the company achieved a net profit of 157 million yuan in the fourth quarter, with a significant increase month on month. Among them, the company sold 15500 tons of lithium iron phosphate in the fourth quarter, which was further improved compared with the third quarter. At the same time, due to the tight supply of lithium iron phosphate business, the price of raw materials, especially lithium carbonate, continued to rise, The company’s advance inventory also improves the profit space of products in a large length. Since the first quarter of this year, the price of lithium carbonate has remained in an upward trend until it has been stable in the last two weeks. It is expected that the raw material inventory in the first quarter will also increase the performance in the first quarter. This year, the company will continue to release the capacity of lithium iron phosphate. It is expected that the company will increase the capacity of more than 110000 tons by the end of the year. Adding that the supply of lithium iron phosphate is still relatively tight in the early stage of this year, it is expected that lithium iron phosphate will still contribute to the core increment.
The price of raw materials has increased, and the profit of vehicle urea is under pressure to a large extent. It is expected to gradually improve this year. In 2021, affected by the continuous rise of raw material prices, the cost pressure of the company’s vehicle urea business increased significantly. According to the calculation, the single ton profit of vehicle urea remained above 200 yuan in the first half of the year, but in the second half of the year, the single ton profit decreased by at least half, which put relative pressure on the company’s overall business. At the same time, due to the influence of industrial competition, the postponement of the national six-year policy and other factors, the annual sales volume was about 450000 tons, The month on month increase is about 70000 tons. It is expected that the overall cost pressure in 2022 will improve in the later stage, and the product sales volume will increase with the implementation of national six.
Investment advice
The company has grasped the demand trend of lithium iron phosphate and accelerated capacity construction. After the acquisition of beiteri, it has successively formed multiple industrial chain production bases in Jiangsu, Tianjin, Sichuan and Shandong. Through capacity construction and industrial chain cooperation, the company is expected to enter the stage of rapid production and sales improvement. The company has raised the profit forecast of 26% and 19% in 2022 and 2023, and predicted that the net profit attributable to the parent company from 2022 to 2024 will be 748 million yuan and 19% respectively 895 million yuan, 1065 million yuan, EPS of 1.55, 1.86 and 2.21 yuan respectively, corresponding to 16, 14 and 11 times of PE respectively, maintaining the “overweight” rating.
Risk tips
The construction process of new production capacity did not meet expectations, and the intensification of industrial competition led to the reduction of industrial profits and risks.
