\u3000\u3 Shengda Resources Co.Ltd(000603) 799 Zhejiang Huayou Cobalt Co.Ltd(603799) )
The company released the annual report of 2021, and the profit increased significantly by 235% year-on-year; The company’s Cobalt and copper business has achieved rapid growth, and the business of ternary precursor and cathode material has grown rapidly; Maintain the overweight rating.
Key points supporting rating
The company’s profit in 2021 increased by 235% year-on-year, which is in line with expectations: the company released its annual report in 2021 and achieved an operating revenue of 35.317 billion yuan, a year-on-year increase of 66.69%; The profit was 3.898 billion yuan, a year-on-year increase of 234.59%; Deduct non-profit of RMB 3.853 billion, with a year-on-year increase of 242.84%. According to estimates, 2021q4 achieved a profit of 1.529 billion yuan, a year-on-year increase of 219.72% and a month on month increase of 69.81%; Deduct 1.535 billion yuan of non-profit, an increase of 209.70% year-on-year and 70.25% month on month. The performance of the company’s annual report is in line with expectations.
The ternary materials business is in rapid volume, and the volume of cobalt and copper products is rising simultaneously: in 2021, the company produced 65406 tons of ternary precursors and sold 59112 tons, with a year-on-year increase of 77.41%, revenue of 5.761 billion yuan and gross profit margin of 15.19%. 54767 tons of cathode materials were produced and 56703 tons were sold, with a year-on-year increase of 114.78%, a revenue of 4.764 billion yuan and a gross profit margin of 11.56%. 36513 tons of cobalt products were produced and 25120 tons were sold, with a year-on-year increase of 11.00%, revenue of 8.412 billion yuan and gross profit margin of 31.52%, an increase of 10.47 percentage points year-on-year. 102893 tons of copper products were produced and 93443 tons were sold, with a year-on-year increase of 19.32%, revenue of 5.378 billion yuan and gross profit margin of 49.10%, an increase of 4.13 percentage points year-on-year.
The new production capacity is gradually released and cooperation with Volkswagen and Castle Peak is reached: the Huayue wet process project in Indonesia is expected to reach production capacity by the end of June; The whole process of Huake fire method project is expected to be completed in the second half of the year; Huafei wet process project is expected to meet the feeding conditions in the first half of next year; The 30000 ton nickel sulfate project in Quzhou district has entered the commissioning stage, and the 50000 ton high nickel nickel sulfate project is expected to be put into production in the first half of the year; Some production lines of the project with a fixed annual output of 50000 tons of high nickel ternary precursor have entered trial production in January; Chengdu BAMO cathode material is 50000 tons, and the whole line of phase 1 is completed. In addition, the company has reached a cooperation intention with Volkswagen and Qingshan industry in the upstream and downstream of the cathode material industry chain to jointly build an integrated manufacturing platform for lithium battery materials.
Valuation
In combination with the company’s annual report in 2021 and industry changes, we adjusted the company’s predicted earnings per share from 2022 to 2024 to 4.66/6.03/7.80 yuan (the original predicted diluted earnings per share was 3.22/4.10 / – yuan), corresponding to 15.0/11.6/9.0 times of P / E; Maintain the overweight rating.
Main risks of rating
The demand for new energy vehicles and 3C batteries did not meet expectations; Global cobalt and nickel mining and delivery progress exceeded expectations; Price competition exceeds expectations; Overseas operation and exchange rate risk; The impact of covid-19 epidemic exceeded expectations.
