Jilin Carbon Valley (836077)
Event: the company disclosed its 2021 annual report. The annual revenue was 1.21 billion yuan, yoy + 9.7%, and the net profit attributable to the parent company was 315 million yuan, yoy + 126%; It is calculated that the Q4 revenue is 486 million yuan, yoy + 123%, and the net profit attributable to the parent company is 151 million yuan, yoy + 181.9%.
The high prosperity of carbon fiber industry + capacity release + products were recognized by the market, and the net profit attributable to the parent company increased quarter by quarter in the second half of the year. The company’s product carbon fiber precursor has been widely recognized by the market, with strong market demand and orderly release of production capacity. The main business income shows a continuous growth momentum. The quarterly revenue of 2021q1-q4 is RMB 220 million, RMB 220 million, RMB 280 million and RMB 490 million respectively, and the net profit attributable to the parent company is RMB 66 million, RMB 44 million, RMB 54 million and RMB 151 million respectively. The net profit attributable to the parent company in the second half of the year shows a quarterly upward trend; The quarterly net interest rates of 2021q1-q4 are 29.5%, 19.8%, 19.6% and 31.0% respectively.
Jilin Carbon Valley is the leader of China’s carbon fiber precursor link and will fully benefit from the large demand for carbon fiber. The process formula of carbon fiber precursor link is difficult and difficult to break through in the short term. Jilin Carbon Valley adheres to the scientific research system of Jilin Institute of chemistry and uses acrylic technology to tackle key problems in the precursor, and the accumulated technical and experience barriers are high. In 2018, Zhejiang Jinggong and Jilin Carbon Valley jointly tackled key problems, and Weihai Guangwei Composites Co.Ltd(300699) provided sizing agent. In 2020, a breakthrough was made in the carbonization of large tow, which can be applied to the carbon beam of wind turbine blade, creating conditions for the civil use of carbon fiber. In the four-year process from 2018 to 2021, the company’s net profit rate reached 26.0% from loss. In addition to the contribution of the lower price of raw material acrylonitrile, it is more a significant scale effect. Carbon fiber is known as the “king of new materials in the 21st century”, and its unique excellent quality provides broad development prospects. The carbon fiber trend of wind power blades in the 14th five year plan is clear, which will promote the release of carbon fiber demand. The amount of hydrogen energy vehicles in the 15th five year plan will drive the demand for carbon fiber in hydrogen storage bottles. In addition, photovoltaic carbon heat field materials and large aircraft industry have become the driving forces driving the rapid growth of carbon fiber demand, The carbon fiber precursor link will also benefit fully.
It is expected to maintain a rapid growth in 2022, and the unit cost is expected to continue to decline under the advantage of scale: 1) on December 9, 2021, the company announced the daily related party transactions in 2022: ① it is expected to purchase steam, electricity, sewage, demineralized water and other products from Jilin Guoxing new materials, with an amount of about 250 million yuan (+ 103.6%); ② It is estimated that the sales amount of carbon fiber and other products to Jilin Baojing carbon material company and Jilin Guoxing composite material company is about 600 million yuan (+ 43.2%); It is estimated that the large difference between the above amount and the actual amount of the previous year is due to the increase in output in 2022; 2) According to the disclosure on the official website of Jilin provincial government, by the end of 2021, Jilin Chemical Fibre Co.Ltd(000420) group’s raw silk (the business is undertaken by Jilin Carbon Valley) has a production capacity of 60000 tons, and the first phase of the 150000 ton project under construction is expected to be put into operation in June 2022, with a considerable increase in production capacity; 3) From the historical financial data of Jilin Carbon Valley, the scale effect of carbon fiber precursor is obvious. With the expansion of scale, the unit precursor cost of the company is expected to show a downward trend.
Investment suggestion: considering the release rhythm of the company’s production capacity, it is estimated that the net profit attributable to the parent company from 2022 to 2024 will be RMB 640 / 10.1 / 1.63 billion respectively, and the corresponding PE will be 27x / 17x / 11x respectively, maintaining the “recommended” rating.
Risk warning: the commissioning progress of the new project is lower than the expected risk, and the release progress of downstream demand is lower than the expected risk.
