\u3000\u30003 China Zhenhua (Group) Science & Technology Co.Ltd(000733) 00073)
The company released the first quarter report of 2022, and the profit of 2022q1 increased by 159% year-on-year. The company's high nickel materials are in rapid volume, and the annual performance is expected to achieve high growth; Maintain the overweight rating.
Key points supporting rating
The first quarter profit of 2022 increased by 159% year-on-year: the company released the first quarter report of 2022. In 2022q1, the operating revenue was 3.842 billion yuan, a year-on-year increase of 204.00%, and the net profit attributable to the parent company was 387 million yuan, a year-on-year increase of 159.38% and a month on month increase of 6.46%; Deduct non net profit of RMB 351 million, with a year-on-year increase of 205.72% and a month on month increase of 13.48%. The company previously released the performance forecast for the first quarter of 2022. It is expected to achieve a profit of 350400 million yuan in the first quarter. The company's performance is close to the upper limit of the forecast and in line with market expectations.
R & D expenses increased significantly, and net operating cash flow improved significantly: the company's period expenses in the first quarter of 2022 were 263 million yuan, an increase of 164.40% year-on-year and 47.57% month on month; During the period, the expense rate was 6.84%, a year-on-year decrease of 1.02 percentage points and a month on month increase of 1.07 percentage points. The increase of the company's expenses during the period was mainly due to the increase of the company's R & D investment in the first quarter and the sharp increase of R & D expenses. The R & D expenses in the first quarter were 228 million yuan, a year-on-year increase of 262.11% and a month on month increase of 106.76%. In addition, the company's operating capacity gradually improved in the first quarter of 2022, and the net cash flow from operating activities was 185 million yuan, a significant year-on-year increase of 159.45%.
High nickel products are in large quantities rapidly, and the annual performance is expected to achieve rapid growth: the company's order volume continued to grow rapidly in the first quarter of 2022, and the products were fully produced and sold. It is estimated that the shipment of cathode materials in the first quarter will reach 16000 tons, with a month on month increase of about 10%. The company's third-generation high nickel and ultra-high nickel and other new products have been steadily in large quantities, and the share of high nickel products in the company's products has further increased, boosting the company's single ton profitability significantly. We expect the company's net profit per ton in the first quarter to be close to 20000 yuan, an increase of more than 30% month on month. According to the company's annual report, the company's production capacity is expected to reach 100000 tons by the end of the year, and the annual shipment volume will further increase, thus supporting the rapid growth of annual performance.
Valuation
Under the current share capital, combined with the company's announcement and industry conditions, we predict that the company's earnings per share from 2022 to 2024 will be 3.16/4.37/5.54 yuan, corresponding to a P / E ratio of 20.6/14.9/11.7 times; Maintain the overweight rating.
Main risks of rating
The demand of the industrial chain does not meet the expectation; Adverse fluctuations in raw material prices; The impact of the epidemic exceeded expectations; The new energy vehicle industry policy did not meet expectations; The product strength of new energy vehicles did not meet expectations.
