\u3000\u30003 China Zhenhua (Group) Science & Technology Co.Ltd(000733) 00073)
The company released the performance forecast for the first quarter of 2022. In 2022q1, the profit increased by 135%-168% on a year-on-year basis. The company’s orders outside China grew rapidly, and the high nickel products were steadily in large quantities; Maintain the overweight rating.
Key points supporting rating
It is predicted that the profit in the first quarter of 2022 will increase by 135% – 168% year-on-year: the company released the performance forecast for the first quarter of 2022. It is expected that the net profit attributable to the parent company will reach 350400 million yuan in the first quarter of 2022, with a year-on-year increase of 134.58% – 168.09%; Deduct non net profit of RMB 320370 million, with a year-on-year increase of 178.40% – 221.91%. The company previously announced its main business data from January to February 2022. From January to February, the operating revenue was about 2.348 billion yuan, a year-on-year increase of about 202.21%; The net profit attributable to the parent company was about 230 million yuan, with a year-on-year increase of about 113.91%. The company’s forecast performance slightly exceeded market expectations.
Orders from outside China increased rapidly, and high nickel products increased steadily: in the first quarter of 2022, orders from major international and Chinese customers continued to grow rapidly, and the production line was in full production. It is estimated that the company’s shipment volume will reach 16000 tons in the first quarter of 2022, with a month on month increase of about 10%. The company’s third-generation high nickel and ultra-high nickel and other new products are steadily in large quantities, and its profitability is further enhanced. We estimate that the company’s net profit per ton in the first quarter was close to 20000 yuan, an increase of more than 30% month on month. It is estimated that the company’s shipment volume is expected to reach 90000 tons in 2022, further improving its market competitiveness.
Accelerate the layout of lithium iron phosphate and solid-state battery technology and strengthen industrial chain cooperation: the company accelerated the product development and market layout of lithium iron phosphate business, successfully completed the finalization of lithium iron phosphate process, and specially developed lithium iron phosphate and lithium manganese iron phosphate materials with higher performance for electric vehicles and high-end energy storage market. In addition, the company’s solid-state lithium battery products have completed product development, realized the market-oriented application and batch supply of solid-state lithium battery products, successfully imported Ganfeng Lithium Co.Ltd(002460) , Weilan new energy, Qingtao, Huineng and other solid-state battery customers, and realized batch sales. The company actively carried out upstream and downstream cooperation in the industrial chain and signed strategic cooperation agreements with SK, Finnish mining, Cngr Advanced Material Co.Ltd(300919) , Zhejiang Huayou Cobalt Co.Ltd(603799) and Weilan new energy.
Valuation
Under the current share capital, combined with the company’s announcement and industry conditions, we predict that the earnings per share in 20222024 will be 3.16/4.37/5.54 yuan, corresponding to 22.2/16.0/12.7 times of P / E; Maintain the overweight rating.
Main risks of rating
The price of raw materials fluctuated disadvantageously, the industrial policy of new energy vehicles did not meet expectations, the product power of new energy vehicles did not meet expectations, the demand of the industrial chain did not meet expectations, and the impact of the epidemic exceeded expectations.
