Changhong energy (836239)
Event: the company’s 2021 annual report and the first quarterly report of 2022 were released. During this period, the company realized an operating revenue of 3.071 billion yuan in 2021, a year-on-year increase of 57.35%; The net profit attributable to the parent company was 253 million yuan, a year-on-year increase of 56.19%; In 2022, Q1 achieved an operating revenue of 960 million yuan, a year-on-year increase of 48.12%; The net profit attributable to the parent company was 56.34 million yuan, a year-on-year increase of 8.14%.
Lithium + alkaline two wheel drive has gradually crossed the trough of the impact of raw material prices: the company belongs to the cylindrical high rate lithium battery and primary cylindrical alkaline zinc manganese battery industry in the battery industry. It is a service provider for the design, development, production and marketing of lithium battery and alkaline manganese battery. In 2021, the company achieved an operating revenue of 3.071 billion yuan, Q1-Q4 revenue of 6.48/7.49/8.28/847 million yuan respectively, and Q1 revenue of 960 million yuan in 2022, with a year-on-year increase of + 48.12% and a month on month increase of + 13.40%, mainly due to the expansion of sales channels, the release of new production capacity of Changhong JieChuang project and the growth of sales scale. In terms of operating results, the net profit attributable to the parent company Q1-Q4 in 2021 was 5210 / 7508 / 7595 / 4974 million yuan respectively, and the net profit attributable to the parent company Q1 in 2022 was 56.34 million yuan, a year-on-year increase of + 8.14% and a month on month increase of + 13.27%. The company’s Q1 gross profit margin in 2022 was 14.29%, with a year-on-year ratio of -10.8pct and a month on month ratio of -3.3pct; The net interest rate was -2 PCT + 0.075% yoy.
Lithium battery increased by 134% in 2021, and its capacity continued to expand: the company’s lithium battery revenue in 2021 reached 1.732 billion yuan, a year-on-year increase of + 133.79%, and its gross profit margin was 21.70%, a year-on-year increase of -7.83pct, mainly due to the continuous high downstream demand of the company. The company’s capacity continued to expand through the construction of raised investment projects and asset restructuring. In 2021, the company implemented the Mianyang lithium battery capacity expansion project, adding three 18650 lithium battery production lines and one 21700 lithium battery production line. The 18650 lithium battery production line has been put into operation and reached production in the fourth quarter of 2021, and the 21700 production line has entered the stage of output climbing. At the same time, the construction of the new plant area of the company’s Taizhou plant is under way. It is expected that one 18650 production line and one 21700 production line will be added by the end of December 2022. In addition, according to the company’s asset restructuring plan, the company’s lithium battery capacity will be 166 million in 2021, 409 million in 2022 and 504 million in 2023.
The lithium battery business has a high rate layout, and gradually enters the TTI and other foreign-funded industrial chain + the price increase is effective, and the profitability is expected to be repaired: the company adapts to the high rate trend and introduces inr186502.5/3.0ah, inr217003.0/4.0ah, ultra-low temperature rate battery inr186502.5/3.5lah and other products. It has the supply capacity of all series of high rate lithium battery products and has certain advantages in low-temperature discharge performance. In addition, based on the original customers, the company has gradually entered the world-class customer supply chain system, such as TTI, Baide, BYD ( Byd Company Limited(002594) ), Shanghai qiwai, Philips, Ecovacs Robotics Co.Ltd(603486) , Anker Innovations Technology Co.Ltd(300866) and other companies. Some customers have signed confidentiality agreements and some customers have completed Factory review (company announcement). At the same time, as the effect of price increase between the company and customers gradually appears, the profitability of the company is expected to be further repaired.
The alkali power business grew steadily, and the order volume of high-end customers continued to grow: the company’s alkali power business achieved a revenue of 1.248 billion yuan in 2021, a year-on-year increase of + 12.90%, and the gross profit margin was 22.74%, a year-on-year increase of -0.07pct. The company’s alkali power business adheres to the key customer strategy and stabilizes production and sales. In 2021, the orders of the company’s high-end alkali power customers further increased, of which the sales to Hangzhou nengpai (the main supplier of Amazon alkali power) increased by 13.34% to 312 million yuan year-on-year, and the sales to energizer and its affiliated enterprises (the largest battery enterprise in the United States, with energizer brand) increased by 47.89% to 224 million yuan year-on-year.
Investment suggestion: Based on the alkali power business, the company continues to overweight the layout of lithium battery business. Under the trends of cordless power tools, lithium electrification and lithium battery capacity transfer, the company is expected to continue to grow. The latest market value of the company is 4.3 billion yuan, with PE (TTM) of 16.8x. It is recommended to pay attention. The company’s equity distribution in 2021 plans to distribute a cash dividend of 10 yuan (including tax) for every 10 shares to all shareholders with undistributed profits; The capital reserve formed by the stock issuance premium is converted into 6 shares for every 10 shares to all shareholders (no tax is required), and a total cash dividend of 81.28 million yuan is expected to be distributed, with an increase of 48.77 million shares. It is recommended to pay attention.
Risk warning: the development of downstream industries is less than expected, and the implementation risk of asset restructuring
