\u3000\u3 Jointo Energy Investment Co.Ltd.Hebei(000600) 884 Ningbo Shanshan Co.Ltd(600884) )
Key investment points
The company is a global leader in lithium battery cathode materials and polarizers
The company focuses on the business of cathode materials and polarizers, and the non core businesses such as cathode materials, photovoltaic and energy storage are gradually stripped off. The net profit attributable to the parent company in 2021 was 3.34 billion yuan, a year-on-year increase of 2320%. The assessment objective of the company’s 2022 equity incentive plan is that the growth rate of the company’s revenue from 2022 to 2025 compared with 2021 shall not be less than 30% / 75% / 130% / 165% respectively.
Negative electrode material: the integrated layout speeds up, and the shipment of silicon-based negative electrode can be expected
We predict that by 2025, the global demand for negative electrode materials will reach 2.05 million tons, and the four-year CAGR will be 42%, of which artificial graphite will occupy the mainstream, while silicon-based negative electrode has the advantages of high energy density, and the volume is expected to be rapid after 2023. The company is the global leader in artificial graphite. The current capacity of negative electrode materials is about 120000 tons. The 60000 ton negative electrode integration project of Baotou phase II in Inner Mongolia is climbing. The 100000 tons of Meishan base phase I in Sichuan is expected to be released in 2023. The effective capacity in 2023 is about 280000 tons, and the self supply rate of graphitization is increasing rapidly. The latest generation of fast charging products (3C, 5C) of the company has been put into trial production in the global mainstream consumer battery enterprises, and is expected to be fully introduced in 2022; The performance of silicon oxygen negative electrode is the world’s leading, and has passed the product certification of global high-quality power customers.
Polarizer: local supply and demand is tight, and the company expands production to stabilize its global leading position
Polarizer is a link with high gross profit margin in the LCD industry chain. Thanks to the shift of global display panel production capacity to Chinese Mainland, localized supply is facing a capacity gap. At the same time, the accelerated penetration of large-size panels has led to an increase in the demand for ultra wide polarizer. In 2020, the company acquired LG Chemical polarizer business and became a global leader. The company’s polarizer ultra wide front-end production capacity is strong, and the back-end processing bases are all over the country, which can quickly respond to customers. At present, the relocated production line in Guangzhou is under trial production, and the production line in Zhangjiagang has been started, which will provide support for the company’s performance.
Other businesses: gradually peel off assets with poor profitability and focus on the main business
In 2021, the company transferred the controlling interest of Shanshan energy to BASF. The positive business is no longer consolidated, but still holds 49% equity, which is expected to contribute investment income to the company. In January 2022, the company announced that it would transfer 100% equity of Hunan Yongshan lithium industry to its related party Jinzhou Jixiang Molybdenum Co.Ltd(603399) . In addition, non core businesses such as photovoltaic, energy storage, charging pile and investment have gradually completed asset divestiture. In the future, the company will focus on two major businesses: cathode materials and polarizers.
Profit forecast and valuation
The company is a global supplier of cathode materials and polarizer heads, with integrated layout to improve profitability. We estimate that the net profit attributable to the parent company in 22-24 years will be RMB 3.384 billion, RMB 4.471 billion and RMB 5.394 billion, and the corresponding EPS will be RMB 1.58, RMB 2.09 and RMB 2.52 per share respectively. According to the segment valuation method, we have given the negative electrode material business 22 years of industry average pe26 times, corresponding to the market value of 28.7 billion yuan; Give polarizer business 22 years pe25 times, corresponding to market value of 38 billion yuan; Give other businesses 15 times of pe15 in 22 years, corresponding to a market value of 11.4 billion yuan. To sum up, the target market value of the company in 22 years is 78.1 billion yuan, which corresponds to 58% of the current market value. Maintain the “buy” rating.
Risk warning: industry competition intensifies; The price rise of raw materials exceeded expectations; New product and technology development risks.
