\u3000\u30003 China Zhenhua (Group) Science & Technology Co.Ltd(000733) 00073)
Key elements of reporting:
On April 10, the company released the performance forecast for the first quarter of 2022. The profitability of the company’s cathode material business is excellent. The increase in the demand for downstream class C models drives the rapid growth of the company’s cathode material business. The company’s revenue and net profit will increase significantly in 2021. The high growth trend will continue in 2022q1, and it is expected to continue to maintain high growth in the future.
Key investment points:
Strong downstream demand and high nickel ternary Prosperity: in 2021, China sold 3521000 new energy vehicles, a year-on-year increase of 1.6 times; The sales volume of class C models totaled 232000, of which the sales volume of class C pure electric and plug-in hybrid reached 94000 / 139000 respectively. The prosperity of class C models was high, driving the growth of the shipments of high-end ternary batteries equipped with them. The company is the leader of high nickel ternary materials, with annual 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 sales volume of cathode materials increased significantly, the profitability improved rapidly, and the performance of the company increased significantly in 2021. From January to February this year, the sales of pure electricity and plug-in hybrid reached 20000 and 34000 respectively, with a year-on-year increase of 50.2% / 101.3% respectively. The high view of class C vehicles led to an increase in the shipment of Q1 cathode materials of the company.
Q1 off-season data are bright and profitability is improved: in the first quarter of 2022, the company realized a net profit attributable to the parent company of 350400 million yuan, with a year-on-year increase of 151.34% in terms of the median value. The main reasons for the continuous growth of the company’s performance are as follows: 1) the company focuses on major customers outside China and has full orders; 2) Strong R & D of high nickel and ultra-high nickel products, and steady and large-scale production of new products; 3) The company’s cost control is effective, and the long-term association locks in the supply of raw materials and keeps a certain inventory to effectively deal with the market price fluctuation of raw materials; 4) The company’s products have strong bargaining power. In 2021, the average price of ternary materials was 158.41 yuan / kg, with a year-on-year increase of 35.63%. In the middle of 2022, the production and sales of Shanxi Guoxin Energy Corporation Limited(600617) vehicles are expected to exceed 5.5 million, and the company’s performance is expected to maintain rapid growth.
The expansion of production capacity is accelerated, and the integrated layout highlights the leading advantages: in 2021, the production capacity of ternary materials is 41000 tons, and the output is 46100 tons. Some products are outsourced, and the utilization rate of production capacity is as high as 112.22%. The company has a total capacity of 70000 tons of cathode materials under construction, and the capacity of 50000 tons of ternary materials of Changzhou dangsheng phase II project will be gradually put into operation in the second half of 2022. It is expected that the capacity of cathode materials of the company will reach more than 100000 tons in 2022; The 20000 ton lithium cobalt oxide capacity of Jiangsu dangsheng phase IV project is expected to be put into operation in 2023, and the cathode material capacity is expected to exceed 150000 tons in 2023. At the same time, the company has accelerated the layout of long-term production capacity. The first phase of high nickel power cathode materials with an annual output of 100000 tons in Europe has signed a strategic agreement, which will accelerate the implementation; The company has integrated the production capacity of lithium iron phosphate and invested in the construction of 300000 tons of lithium iron phosphate integrated chemical plant in Guizhou. The phase I project has entered the project approval stage. The company’s own production capacity, continuously improve the process, improve the amount of equipment and unit production capacity, which is the leading target in the high nickel track.
Profit forecast and investment suggestions: in view of the high prosperity of the high nickel ternary battery industry, the successive landing of the capacity under construction and the continuous R & D iteration of the company’s products, the company is expected to achieve an operating revenue of 16.3382491933809 billion yuan and a net profit attributable to the parent company of 1.483/20.052844 billion yuan in 22-24 years. Based on the company’s leading position in high-end ternary materials, we maintain the overweight rating.
Risk factors: the price of upstream raw materials fluctuates, and the production progress of new production capacity is less than expected.
