\u3000\u3 Guocheng Mining Co.Ltd(000688) 779 Hunan Changyuan Lico Co.Ltd(688779) )
Event overview. On April 26, 2022, the company released the first quarter report of 2022. In 2022q1, the company achieved a revenue of 3.393 billion yuan, an increase of 179.31% and a ring increase of 47.20%; The net profit attributable to the parent company was 304 million yuan, with an increase of 163.75% and a ring increase of 42.23%; Are located near the median of the previous performance forecast, in line with expectations. The net profit attributable to the parent company after deducting non profits was 277 million yuan, with a ring increase of 33.00%; Non recurring profit and loss is 27 million yuan, including 31 million yuan of government policy subsidies; At the end of March, the company’s inventory was 2.354 billion yuan, an increase of 49% compared with the end of 21 years, mainly due to the obvious rise in the price of upstream raw materials and the increase in procurement expenditure and inventory.
Excellent cost control ability and continuous improvement of net profit per ton. In 2022q1, the company achieved a gross profit margin of 15.60%, an increase of 1.61pcts month on month, and a net profit margin of 8.96%, a decrease of 0.31pct month on month. The company’s previous ton cost, ton manufacturing and labor costs were at the lowest level in the industry. According to our calculation, the company’s net profit per ton in Q4 in 21 years was about 20000 / ton, and the net profit per ton in Q1 in 22 years was about 20000 / ton, which was basically the same month on month.
The production capacity continues to expand, and LFP, ternary and double lines go hand in hand. On April 16, 2022, the company issued a prospectus for convertible bonds. The company plans to raise 3.25 billion yuan for the “phase II project of expanding the production of cathode materials for automotive lithium batteries” and “60000 tons of lithium iron phosphate project”. It is expected that after the project is completed, 40000 tons of ternary capacity and 60000 tons of lithium iron phosphate capacity can be added. The company shipped 42000 tons of ternary cathode materials in 21 years, with a year-on-year increase of 159%. The production capacity of phase I of high tech base, Lugu and Tongguan base was 80000 tons at the end of 21 years. We expect that Q1 shipments will be about 15000 tons in 22 years, and the annual full production and full sales shipments will reach 80000 tons. The LFP capacity of another 60000 tons will be steadily promoted. It is expected to be put into operation and contribute to revenue in 2023.
Increase R & D investment and seize the commanding height of new technology in advance. The company invested 136 million yuan in research and development in Q1 in 22 years, with a year-on-year increase of 144.91%, which is mainly due to the fact that some research and development projects of the company have entered the key stage of development, increasing the research and development investment in related products, affecting the year-on-year increase of R & D expenditure. The company continues to promote new product design and process route upgrading, increase the development of high nickel materials, actively reserve material technology in xhev field, predict the future technology development route, and layout new generation battery material fields such as solid-state lithium battery and sodium ion battery.
Backed by Minmetals, the self supply of precursors closely follows the pace of production expansion. Minmetals Group is the actual controller of the company, providing the company with nickel cobalt lithium raw materials, ternary precursors and other resource support. The monthly production capacity of Jinchi materials, a subsidiary, has exceeded 3000 tons, and it is expected to achieve a production capacity of 35 Xj Electric Co.Ltd(000400) 00 tons in 22 years, all of which are used for its own continuous production. Jinchi has mastered the core technology of precursor production, the production capacity has been continuously promoted, and the proportion of self supply is expected to be further improved in the future.
Investment suggestion: we expect the company to realize a net profit attributable to the parent company of 1.296 billion yuan, 2.021 billion yuan and 2.606 billion yuan in 22-24 years, with a year-on-year growth rate of 85%, 56% and 29%. The current share price corresponding to PE is 21, 13 and 10 times respectively. Considering that the company is in a high-quality track, with significant integration advantages and cost control significantly better than the industry average level, we maintain the “recommended” rating.
Risk tip: the sales volume of new energy vehicles is lower than expected; The progress of capacity expansion is less than expected; Price fluctuation of raw materials; Industry competition intensifies; Risk of large customer concentration.
