\u3000\u3 China Vanke Co.Ltd(000002) 340 Gem Co.Ltd(002340) )
Event: the company released the first quarterly report of 2022. In the first quarter of 2022, the operating revenue was 6.967 billion yuan, an increase of 86.78% year-on-year and 8.70% month on month; The net profit attributable to the parent company was 332 million yuan, an increase of 20.23% year-on-year and 60.37% month on month; The net profit deducted from non parent company was 318 million yuan, with a year-on-year increase of 25.47% and a month on month increase of 446.97%.
The precursor business ranks second in the world and its profitability has been steadily improved. In 2021, the company’s new energy battery materials business achieved an operating revenue of 13.73 billion yuan, a year-on-year increase of 106.13%. The shipment of ternary precursor materials for power batteries, the company’s core product, exceeded 91000 tons, realizing a sales revenue of 9.42 billion yuan, corresponding to a single ton price of 103500 yuan / ton, which was significantly higher than that in 2020, mainly due to the increase in the proportion of shipments of 8 series and above high nickel products and the rise in the price of lithium carbonate and other raw materials. In 22q1, the company’s gross profit margin reached 16.35%, about 3PP higher than that in 21q4, and the pressure on the cost side has been partially transmitted.
Production capacity continued to improve. By the end of 2021, the total production capacity of the company’s ternary precursor has reached 230000 tons / year. The company has comprehensively started the technical transformation and equipment upgrading of the two nickel cobalt manganese raw material chemical systems in Jingmen Park and Taixing Park, and expanded the capacity of the construction of a battery grade high-purity nickel cobalt salt crystal project with an annual output of 100000 tons, which will be completed and put into operation within the year. By the end of 2021, the total output of nickel cobalt manganese raw material chemical system of the company has reached 110000 metal tons, including 60000 metal tons of nickel chemical system, 32500 metal tons of cobalt chemical system and 18000 metal tons of manganese chemical system.
Create a directional circulation mode and actively integrate into the upstream and downstream mainstream supply chain and mainstream market chain. The company has successively signed a memorandum of cooperation with Eve Energy Co.Ltd(300014) on the directional recycling of 10000 tons of nickel products, a strategic cooperation agreement with Farasis Energy (Gan Zhou) Co.Ltd(688567) , Ningbo Ronbay New Energy Technology Co.Ltd(688005) and a strategic supply cooperation framework agreement with Xtc New Energy Materials(Xiamen) Co.Ltd(688778) source. In the next five years, the total orders of the company’s precursor market strategy will exceed 1.3 million tons. In March 2022, the company signed a memorandum of agreement on medium and long-term supply of high nickel precursors for power batteries with ecoprobm of South Korea. The company will supply 700000 tons of high nickel precursor materials (NCA & NCM) for power batteries to ecoprobm from 2023 to 2026.
Profit forecast and investment suggestions. It is estimated that the company’s EPS from 2022 to 2024 will be 0.29 yuan, 0.48 yuan and 0.63 yuan respectively, and the net profit attributable to the parent company will maintain a compound growth rate of 49% in the next three years. Considering that the company has gradually opened the closed loop of circular industrial chain, strategic cooperation has formed a stable support for performance and maintained the “buy” rating.
Risk tip: the sales volume of new energy vehicles is less than expected, the risk of technical route change, the risk of raw material price fluctuation, and the construction of new projects is less than expected.
