\u3000\u3 Guocheng Mining Co.Ltd(000688) 707 Guizhou Zhenhua E-Chem Inc(688707) )
Event:
Guizhou Zhenhua E-Chem Inc(688707) disclosed that in the first quarter report of 2022, the company achieved a revenue of 2.58 billion yuan during the reporting period, with a year-on-year increase of 161.4% and a month on month increase of 30.8%; The net profit attributable to the parent company was 340 million yuan, an increase of 345.4% year-on-year and 125.2% month on month; Deduct non net profit of 340 million yuan, with a year-on-year increase of 352.3% and a month on month increase of 126.6%.
Key investment points:
The shipment volume increased month on month, superimposed excellent cost control ability, and the company’s ternary positive performance greatly exceeded expectations. The company’s sales volume continued to increase month on month, mainly due to the rapid growth in the power battery market demand of downstream new energy vehicles. The net profit per ton of Q1 of the company continued to increase in 2022, mainly due to the effective cost control while the price rose. On the price side, the sharp rise in the market price of upstream raw materials drives the increase in the price of the company’s products; On the cost side, the scale effect brings cost reduction and efficiency increase. The company strengthens the procurement layout of raw materials, prepares goods in advance and effectively controls costs.
The performance of Hongxing electronic recycling business is brilliant, and its contribution to profits will continue to increase in the future. Through participating in Hongxing electronics, the company has arranged the waste lithium-ion battery and material recycling industry, and strengthened the ability to control the cost of lithium salt, ternary precursor and other raw materials. By the end of 2021, the company held 34% equity of Hongxing electronics. According to the estimation of investment income of joint ventures and joint ventures disclosed in the financial report, Q1 Hongxing electronic recycling contributed 13 million investment income to the company in 2022, an increase of 52% month on month compared with 08 million investment income in 2021q4. In the future, with the continuous growth of recycling scale month on month, the cost control ability brought by Red Star Electronics to the company will be significantly enhanced.
At an important turning point in the industrialization of sodium ion battery, the company is expected to seize the opportunity by virtue of its technical advantages. At present, the high price of lithium carbonate drives the rising cost of lithium battery, and sodium battery has entered the stage of accelerated development. The equipment and technology compatibility of ternary cathode production line is very strong. The accumulation of surface modification and single crystal technology of the company helps to grasp the development opportunities of sodium battery. The industrialization advantages of sodium ion battery cathode materials are significant. At present, the company’s sodium ion battery cathode materials have entered the pilot stage.
Profit forecast and investment rating: considering the high demand for downstream new energy vehicles, the expansion of the company’s production capacity, driving the growth of shipments, and the expansion of the scale of self supplied materials of Hongxing electronics at the raw material end, it is expected that the cost will continue to optimize. Our Shangxiu company will make a profit. It is expected that the company’s operating revenue will be 133.03/199.28/27.735 billion yuan from 2022 to 2024, the net profit attributable to the parent company will be 9.61/14.32/16.95, and the corresponding PE of the current stock price is 21.98x/14.75x/12.47x, “Buy” rating.
Risk tip: the risk of new energy vehicle sales falling short of expectations, the risk of rising raw material prices, the risk of capacity expansion falling short of expectations, the risk of technical iteration falling short of expectations, and the risk of relying on a single customer.
