\u3000\u3 Shengda Resources Co.Ltd(000603) 612 Sunstone Development Co.Ltd(603612) )
Event: the company plans to acquire 94.98% equity of Xinyuan shares for no more than 1.14 billion yuan. The company plans to purchase 949777% of Xinyuan shares by issuing shares and cash and raise supporting funds. The audit and evaluation of the underlying assets have not been completed. The corresponding price of 100% equity in the preliminary agreement is no more than 1.2 billion, and the corresponding acquisition price of 949777% equity is 1.14 billion, of which the cash payment is no more than 30% of the transaction consideration. After the completion of the transaction, Xinyuan shares will become the holding subsidiary of Sunstone Development Co.Ltd(603612) .
Xinyuan Co., Ltd. is mainly engaged in the business of battery graphite cathode materials and thin film capacitors. Xinyuan Co., Ltd. was established in 2003 and was listed on the new third board in September 2016. In 2021, the company achieved revenue of 515 million yuan, an increase of 35.5% at the same time, and the net profit attributable to the parent company was 84 million yuan, a year-on-year increase of 114.59%. Among them, the revenue of graphite cathode business is 259 million, accounting for more than 50%, the gross profit is 105 million, accounting for 68%, and the gross profit margin is 40.4%. The downstream customers of negative electrode are mainly beiteri and Shanshan, accounting for 19.59% and 9.75% respectively in 2021.
As of the 2021 annual report, the total assets of Xinyuan shares were 549 million, the total liabilities were 321 million, and the asset liability ratio was 58.5%. Among the assets, the company has fixed assets of 173 million and current assets of 308 million, including receivables of 142 million and monetary funds of 39 million. The assets mortgaged and pledged due to short-term loans accounted for 19.42% of the total assets. In order to promote the construction of the target company’s 40000 ton graphite anode project of Inner Mongolia Xinyuan graphene, the company will provide a loan of 450 million yuan to the target company.
The capacity of negative electrode materials expanded rapidly and cultivated the second highest growth path. Inner Mongolia Xinyuan graphene, the wholly-owned subsidiary of the subject, is the company’s graphite negative electrode production platform. It was successfully put into operation in Inner Mongolia in August 2016. 10000 tons of graphene negative electrode material (source official website) was constructed in the first phase, and has the integrated production and processing capacity of the whole process. In addition, in April 2022, sotong decided to invest in the first phase of the 200000 ton lithium ion battery cathode material integration project in Jiayuguan City, Gansu Province. The new negative electrode material business sits on two production bases in Inner Mongolia and Gansu, and the company has room for continuous expansion of production capacity.
The target company has the characteristics of mature process, large production expansion potential and stable downstream customers, and has obvious synergy advantages with the main business of the company. Carbon anode materials have strong connections and similarities with the company’s main aluminum prebaked anode in terms of production raw materials, production equipment and production process, which can give full play to the company’s centralized production advantages in the field of petroleum coke and relevant technical experience in the industry. In the future, the company will focus on carbon material industries such as “pre baked anode + lithium battery cathode”, and use green new energy such as photovoltaic, wind energy and hydrogen energy as the cornerstone to build a new carbon material production platform represented by lithium battery cathode, special carbon, carbon ceramic and silicon carbide.
Investment suggestion: the intensive production of prebaked anode contributes to stable performance growth, and the integrated sector of “Fengguang green power graphitization lithium negative electrode” may rebuild a sotong. We expect that the company’s revenue from 2022 to 2024 will be 14.440 billion yuan, 18.137 billion yuan and 23.088 billion yuan respectively, and the net profit will be 819 million yuan, 1.077 billion yuan and 1.493 billion yuan, and the EPS will be 178, 2.34 and 3.25 yuan / share, corresponding to the PE level of 10.7, 8.2 and 5.9 times respectively at the current price, maintaining the “buy” rating.
Risk tip: the risk of approval of acquisition process and the risk of overcapacity in the industry.
