Jilin Carbon Valley (836077)
Event: the company disclosed that in the first quarter report of 2022, the company realized a revenue of 580 million yuan, yoy + 159.3%, a net profit attributable to the parent of 166 million yuan, yoy + 152.2%, and a net profit not attributable to the parent of 176 million yuan, yoy + 170.0%.
The high prosperity of carbon fiber industry + capacity release + products have been recognized by the market, and the performance continues to accelerate month on month. 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 from 2021q1 to 2022q1 is RMB 220 million, RMB 220 million, RMB 280 million, RMB 490 million and RMB 580 million respectively, and the net profit attributable to the parent company is RMB 66 million, RMB 44 million, RMB 54 million, RMB 151 million and RMB 166 million respectively. The net profit attributable to the parent company has increased quarterly since 2021q3; The quarterly net interest rates from 2021q1 to 2022q1 are 29.5%, 19.8%, 19.6%, 31.0% and 28.7% respectively. As one of the important pillar new industries in Jilin Province, carbon fiber industry has received great support from the local government. It is not easy to maintain a rapid growth rate under the influence of the epidemic.
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.
① it is expected that the cost of purchasing water and steam from Jilin Guoxing company will continue to grow rapidly in 2021.2 (+ 10.3 billion yuan in 2021.2%); 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 25X / 16x / 10x 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.
