\u3000\u3 Guocheng Mining Co.Ltd(000688) 567 Farasis Energy (Gan Zhou) Co.Ltd(688567) )
Event: the company released the report for the first quarter of 2022. In the first quarter of 2022, it realized an operating revenue of 1.529 billion yuan, with a year-on-year increase of 317.09%, which was nearly flat month on month; The net profit attributable to the parent company was -244 million yuan, a year-on-year decrease of 38.55%; The net profit deducted from non parent company was -297 million yuan, a year-on-year decrease of 52.68%.
The price of raw materials rises frequently, and the cost pressure is transmitted smoothly. The gross profit margin of the company’s power battery products in 2021 was as low as – 19.01%, and the business lost money for the first time since its listing. It is estimated that the decline in the gross profit margin of the company’s power battery products is dragged down by the rise in the price of raw materials such as lithium carbonate and high depreciation and amortization. At the beginning of 2021, the price of lithium carbonate was less than 50000 yuan / ton. By the end of 2021, the price of lithium carbonate was close to 300000 yuan / ton. By Q1 of 2022, the price of lithium carbonate had stood at 500000 yuan / ton. If 620 tons of lithium carbonate is required for 1GWh ternary lithium battery, the theoretical cost per wh battery will rise by 0.16 yuan / wh in 2021. It is estimated that the power battery business revenue of 21q4 company is about 1.1 billion yuan, and the corresponding power battery product unit price is about 0.84 yuan / wh. The business revenue of 22q1 company reaches 1.4 billion yuan. Assuming that the sales volume is close to 21q4, the corresponding unit price is increased to 1.08 yuan / wh, that is, the price rise has basically covered the impact of the rise in the price of raw materials at the cost end. The gross profit margin of 22q1 company’s sales rebounded to 6.81%, which is expected to improve throughout the year.
The demand for products is good, and the production capacity is climbing steadily. The company has delivered to Daimler eva2 and mfa2 platforms, covering EQs, EQA, EQB and other models, and has carried out cooperation with GAC on multiple platforms and model projects, including aionv, aionsplus, aiony and other key models. At present, the downstream demand is good. According to cleantechnica data, the sales of Mercedes Benz new energy models in the first two months of 2022 are close to 40000, with a year-on-year increase of about 100%, accounting for 3.5%, ranking sixth in the world, and the power battery products of the corresponding company are close to full production and sales. The company has two bases in Ganzhou and Zhenjiang. The existing capacity of Ganzhou base is 5gwh, and the planned capacity of Zhenjiang base is 24gwh. The climbing production of phase II is completed in the second quarter, and phase III is expected to be put into use by the end of the year. In addition, the joint venture plant between the company and Geely technology in Ganzhou is being actively promoted, and the company’s production base in Wuhu is expected to be completed and put into use in 2023.
R & D investment increased rapidly and core technologies continued to make breakthroughs. The company invested 191 million yuan in R & D expenses in 22q1, a year-on-year increase of 66%, and the R & D expense rate exceeded 12%. The company’s R & D team continues to carry out R & D cooperation with power battery international scientific research institutes and top experts, including Stanford University, Tsinghua University, BASF, etc. In 2021, the company added four core technologies, namely “330wh / kg high energy density power battery technology”, “high specific energy fast charging lithium ion battery technology”, “power battery thermal runaway protection technology” and “800V high voltage power battery technology”, which have entered the pilot stage.
Bind high-quality suppliers and improve the ability of supply chain management. With the continuous expansion of the company’s production capacity, the company further forms its control over the supply chain through price negotiation, long-term cooperation and capital cooperation with the supplier. In terms of cathode materials, the company has cooperated with Zhejiang Huayou Cobalt Co.Ltd(603799) strategically to ensure the cost and supply of precursors. The negative electrode material company plans to build a factory through joint venture, and simultaneously extend to the upstream to the graphitization end of stone, so as to layout high-quality resources. At present, the company has invested in Jiangxi Copper Yates. In the future, the company will continue to cooperate with high-quality foil suppliers to lock in high-quality production capacity.
Profit forecast and investment suggestions. It is estimated that the company’s EPS from 2022 to 2024 will be -0.14 yuan, 0.90 yuan and 1.52 yuan respectively. The profit gap in 2022 will be narrower than that in 2021. In 2023, with the gradual release of economies of scale and the easing of the pressure on depreciation and amortization of new production capacity, the company is expected to turn losses into profits and its profitability will reach the industry average level. Considering the deep binding between the company and downstream customers, perfect price adjustment mechanism, smooth cost transmission and strong certainty of future growth, we give the company 26 times PE in 2023, corresponding to the target price of 23.40 yuan, and raise it to the “buy” rating.
Risk warning: the company’s production capacity fails to release the risk as scheduled; Risk of fluctuations in production plans of major customers or major models; Product quality risk; Risk of price change of raw materials; Exchange rate fluctuation risk; Risks of technological change.
