\u3000\u3 Shengda Resources Co.Ltd(000603) 799 Zhejiang Huayou Cobalt Co.Ltd(603799) )
Investment logic
The transformation of lithium battery materials has been fruitful, and the integration cost advantage is significant: the company continues to accelerate the integration transformation process of lithium battery materials. The sales volume of 21h1 precursor is 29000 tons, a year-on-year increase of +129%, and the market share has jumped to the fourth in China. Raw materials account for 90% of the cost of precursors, and upward integration brings significant cost advantages. Without considering the resource side profit, only smelting + process simplification has the cost advantage of about 15000 yuan per ton of precursor.
Indonesia wet nickel project contributed 1 Shenzhen Zhongheng Huafa Co.Ltd(000020) 000 yuan of excess profit per ton of precursor: the cost of nickel sulfate in precursor raw materials increased from 24% of ncm333 to 70% of ncm811. The layout of upstream nickel can effectively reduce the cost. Huayou has arranged pyrotechnics and wet process projects in Indonesia at the same time. The total capacity of wet hpal project is 180000 tons of nickel. Compared with the mainstream rkef pyrotechnics project, the preparation cost of nickel intermediates has a competitive advantage of 6000 US dollars / ton of nickel, and the corresponding cost advantage of 1 Shenzhen Zhongheng Huafa Co.Ltd(000020) 000 yuan per ton of precursor. In addition to the conventional income from nickel resources, the company also earns the excess income created by high barrier wet process projects.
The production capacity of precursor + positive material is rapidly increasing: the company’s early lithium battery production capacity layout has entered the harvest period. In 21-23 years, the equity production capacity of precursor is 64 / 16.4 / 270000 tons, and the equity production capacity of positive material is 31 / 5.0 / 104000 tons. The downward extension + first mover advantage + cost barrier will help the company continuously improve the market share of lithium battery materials.
Cycle + growth attributes: the company was a pure cycle enterprise in the past, and its performance fluctuated greatly with the price of copper and cobalt. With the gradual increase of precursor + cathode materials, the gross profit of lithium battery sector has increased from 13% in 20 years to 28% in 23 years, and will continue to increase. The growth of lithium battery stabilizes the profit cycle, and the contribution of metal price is upward elastic. Under the pessimistic assumption of cobalt nickel price, the company’s profit in 22 years can still achieve positive growth, and under the optimistic assumption, the profit in 22 years will increase by more than 70%. The company will have the attribute of cycle + growth in the future.
Profit forecast & investment suggestions
Considering that the price of nickel, cobalt and copper continues to remain high and the production capacity of the company’s Indonesian nickel project is higher than expected, we raise the net profit attributable to the parent company. It is predicted that the company’s net profit attributable to the parent company in 21-23 years will be RMB 3.93/54.9/7.14 billion respectively (an increase of 5% / 16% / 24% respectively compared with the previous forecast), with a year-on-year increase of + 237.7% / + 39.6% / + 30.1%. EPS is 3.2/4.5/5.8 yuan, and the corresponding PE is 30 / 22 / 17 times respectively. Give a valuation of 30 times the performance in 2022, corresponding to the market value of 164.7 billion yuan, and maintain the “buy” rating.
Risk
The risk of lower than expected demand for new energy, the risk of falling price of copper, cobalt and nickel, exchange risk, the risk of lower than expected project progress, and the risk of lifting the ban on restricted shares.
