\u3000\u3 Shengda Resources Co.Ltd(000603) 315 Liaoning Fu-An Heavy Industry Co.Ltd(603315) )
Key investment points
The company is actively transforming new energy cathode materials, and plans to add new materials to the table, mainly engaged in graphitization processing
The company’s traditional business is steel castings. In 19 years, the assets of the group’s environmental governance business were consolidated. In 21 years, the company entered into a joint venture with beiteri into the negative pole. On May 19, 22, the company announced that it plans to wholly acquire Tianquan Fuan, the graphitized asset of the controlling shareholder, by issuing shares and paying cash. After the completion of this transaction, the graphitized processing of lithium battery negative pole materials will become the company’s new main business. In 21 years, affected by the price rise of raw materials and the order price locking mechanism, the performance of the company was under pressure, and the operating revenue was 951 million yuan, with a year-on-year increase of 7.33%, and the net profit attributable to the parent company was 75 million yuan, with a year-on-year decrease of 24.41%.
The artificial graphite negative electrode has broad prospects, and the self supply of graphitization improves the manufacturing barrier of the industry
Driven by Electric Vehicles & energy storage, the global demand for artificial graphite anode is expected to reach 1.75 million tons in 25 years and 42% CAGR in four years. Graphitization is the core process of artificial graphite. Under the background of dual control of energy consumption, the pace of capacity release slows down. It is expected that the supply and demand will be in tight balance in 22 years, becoming the bottleneck of short-term output. In the future, the graphitization of heavy assets will increase the manufacturing barriers of the negative electrode industry. The self supply rate of graphitization will become the key to determine the profitability and competitive advantage of negative electrode enterprises, and lay the competitive pattern of the industry in the future.
Join hands with beiteri, the leader of negative electrode, to enter the negative electrode, and graphitize the balance sheet to ensure the supply
Beiteri is the world’s leading negative electrode supplier. Its shipment volume has ranked first in the world for seven consecutive years. It goes deep into the global lithium battery supply chains such as Samsung, Contemporary Amperex Technology Co.Limited(300750) , Panasonic and so on. Its profitability is leading in the industry. In order to solve the problem of graphitization supply, beiteri has jointly built 100000 tons of artificial graphite with the company. It is expected that the first phase of 50000 tons will be put into operation in the middle of the year and the second phase of 50000 tons will be put into operation in 23 years. The graphitization assets Tianquan Fuan, which the company plans to wholly acquire, have customers covering mainstream cathode manufacturers beiteri, Ningbo Shanshan Co.Ltd(600884) , Kaijin energy, Shenzhen Xfh Technology Co.Ltd(300890) , Hunan Zhongke Electric Co.Ltd(300035) and so on. The current graphitization capacity is 20000 tons, 60000 tons at the end of 22, and 120000 tons after completion. If it is successfully consolidated, it will become an important growth point of the company’s performance. The graphitization capacity advantage of the company will have a strong synergistic effect with the strong market power of beiteri, the leader of the negative pole. The graphitization capacity will give priority to the production of the negative pole subsidiary. With the help of beiteri’s technology and customer accumulation in the negative pole field, the company has successfully entered the new energy track, and its performance is expected to usher in high growth.
Desulfurization and denitration business grew steadily and light gas turbines were laid out prospectively
The carbon emission standard of the environmental protection industry is becoming increasingly strict. It is estimated that the market scale of China’s desulfurization and denitration industry will exceed 200 billion yuan in 25 years. Liaoning Metallurgical Design and Research Institute, a wholly-owned subsidiary of the company, has a deep accumulation, complete qualification and good local reputation. In 21 years, it has achieved an income of 610 million yuan, a net profit of 148 million yuan and a CAGR of 40% in 16-21 years. In the future, it is expected to pay close attention to both inside and outside the province, and its performance is expected to grow steadily. Driven by the popularity of distributed natural gas power generation and the independent control of gas turbines, the prospect of gas turbines in China is promising. The company plans to lay out micro gas turbines below 50MW in 17 years, which is expected to build a complete industrial chain of distributed energy and create new performance growth points in the future. The large steel casting business is expected to straighten out the pricing mechanism for 22 years and drive the profit recovery after the smooth transmission of costs.
Profit forecast and valuation
The company is a diversified enterprise actively transforming the new energy track, and the negative electrode material has opened the second growth curve. As there is still uncertainty in the promotion of graphitized assets consolidation, without considering the consolidation, we expect the net profit attributable to the parent company to be 194, 296 and 416 million yuan from 2022 to 2024, and the corresponding EPS to be 0.63, 0.96 and 1.35 yuan / share. According to the segment valuation method, we believe that the negative electrode material business corresponds to a reasonable market value of 2.8 billion yuan; The corresponding reasonable market value of environmental treatment business is 7.1 billion yuan; The corresponding reasonable market value of foundry business is 1.5 billion yuan. To sum up, the target market value of the company is RMB 11.4 billion, corresponding to 59 times of PE in 22 years, corresponding to 50% of the current market value. It is covered for the first time and given a “buy” rating.
Risk tips
Global sales of new energy vehicles are lower than expected; The construction of negative electrode and graphitization capacity is less than expected; The competition of artificial graphite negative electrode industry intensifies; The risk of failure of fixed increase and asset acquisition.
