\u3000\u3000 Jiangsu Lopal Tech.Co.Ltd(603906) (603906)
Achievements
On January 10, the company released the performance forecast for 2021. It is estimated that the net profit attributable to the parent company will be RMB 327-359 million in 2021, with a year-on-year increase of 61% – 77%.
Analysis
In the fourth quarter, the performance increased significantly year-on-year and month on month, driving the company’s overall performance. According to the company’s performance forecast, the company’s annual performance increased significantly year-on-year, corresponding to the significant growth of performance in the fourth quarter. The net profit attributable to the parent company was about 132-164 million yuan, with a year-on-year increase of 125% – 180% and a month-on-month increase of 176% – 243%, realizing rapid performance improvement. In the fourth quarter, Changzhou lithium source realized an operating revenue of 1.210 billion yuan and an estimated net profit attributable to the parent company of 13300 yuan, which contributed to the core product profit of the company.
The production and sales of lithium iron phosphate expanded rapidly, the status of raw materials increased significantly, and the product profit expanded significantly. In the fourth quarter, the company sold 15519.38 tons of lithium iron phosphate, accounting for more than half of the company’s annual sales. The continuous improvement of the company’s production capacity led the company to seize the opportunity and achieve a significant increase in revenue and profit under the tight supply market. In the fourth quarter, the market price of lithium carbonate, the main raw material of lithium iron phosphate produced by the company, increased rapidly from 177000 yuan / ton to 275000 yuan / ton. The price increase of raw materials led to the rapid rise of the price of lithium iron phosphate. In the fourth quarter, the market price of lithium iron phosphate increased from 79000 yuan / ton to 103000 yuan / ton. Affected by the rising demand for lithium iron phosphate in the downstream, China’s lithium iron phosphate is still in a state of insufficient supply at this stage. While maintaining the profitability of the product, the product price is continuously rising driven by the rising price of raw materials. In the fourth quarter, the company’s net profit per ton of lithium iron phosphate was about 11300 yuan, which increased significantly. It is expected to be affected by the prosperity of products and the inventory of raw materials. The company has many years of production and operation of lithium iron phosphate, and has a certain reserve of raw materials in the early stage. With the continuous rise of raw materials, the product price is promoted. The upward range of the company’s cost is lower than that of the product price. The price difference of the company’s products is much higher than the constant price difference of the market. In the later stage, the company will continue to expand production capacity, further improve production and sales, and drive the continuous development of lithium iron oxide cathode business.
Traditional business areas are under short-term pressure, and the performance is expected to gradually pick up. In the fourth quarter, the overall performance of the company’s traditional businesses such as urea, lubricating oil and coolant was relatively under pressure, and the price of raw materials remained relatively high, which depressed the product profit. At the same time, the intensification of industry competition affected the profit space to a certain extent. It is expected that the rapid growth of the industry in the short term will be affected by raw materials and competition, and it is expected to gradually recover in the long term.
Investment advice
Raise the company’s profit forecast of 15%, 19% and 25% from 2021 to 2023, and predict that the company’s net profit attributable to the parent company from 2021 to 2023 will be 337, 596 and 755 million yuan, EPS will be 0.70, 1.24 and 1.57 yuan respectively, corresponding to 53, 27 and 22 times of PE, maintaining the “overweight” rating.
Risk tips
The product sales volume does not meet expectations, the risk of overcapacity of lithium iron phosphate and the risk of sharp fluctuations in the price of raw materials.
