Jilin Carbon Valley (836077)
Event: the company estimates that the total profit in 2021 will be RMB 353 million ~ 376 million, with a year-on-year increase of 152.53% ~ 168.98%, and the net profit attributable to the parent company in 2021 will be RMB 300 million ~ 320 million, with a year-on-year increase of 115.46% ~ 129.82%.
The high prosperity of carbon fiber industry + capacity release + products were recognized by the market, and the company’s performance exceeded expectations. The company’s net profit attributable to the parent company from 2021q1 to Q3 is 179 million yuan. Based on this calculation, the net profit attributable to the parent company in 2021q4 is expected to be 121 million yuan to 141 million yuan, an increase of 122.4% – 159.2% month on month. The company’s product carbon fiber precursor has been widely recognized by the market, with strong market demand, orderly release of production capacity, continuous growth in main business income, and significant year-on-year growth in current performance.
Jilin Carbon Valley is the leader of carbon fiber precursor in China and will fully benefit from the large demand for carbon fiber. The process formula of carbon fiber precursor link is difficult and difficult to break through in the short term. Jilin Carbon Valley adheres to the scientific research system of Jilin Institute of chemistry and uses acrylic technology to tackle key problems in precursor, resulting in high accumulated technical and experience barriers. In 2018, Zhejiang Jinggong and Jilin Carbon Valley jointly tackled key problems, and Weihai Guangwei Composites Co.Ltd(300699) provided sizing agent. In 2020, a breakthrough was made in the carbonization of large tow, which can be applied to the carbon beam of wind power blade, creating conditions for the civil use of carbon fiber. By the end of 2020, the raw silk production capacity of Jilin Carbon Valley had reached 40000 tons. In the three-year process from 2018 to 2020, the net profit margin of the company from loss to net profit reached 12.63%, and the net profit margin of 2021q1-q3 rose to 24.75%. In addition to the contribution of the lower price of raw material acrylonitrile, there is more significant scale effect. Carbon fiber is known as the “king of new materials in the 21st century”. Its unique excellent quality provides broad development prospects. The carbon fiber trend of wind power blades in the 14th five year plan will promote the release of carbon fiber demand. The amount of hydrogen energy vehicles in the 15th five year plan will drive the demand for carbon fiber in hydrogen storage bottles. In addition, photovoltaic carbon heat field materials, The large aircraft industry has become the driving force driving the rapid growth of carbon fiber demand, and the carbon fiber precursor link will also benefit fully.
It is expected to maintain a rapid growth in 2022, and the unit cost is expected to continue to decline under the advantage of scale: 1) on December 9, 2021, the company announced the daily related party transactions in 2022: ① it is expected to purchase steam, electricity, sewage, demineralized water and other products from Jilin Guoxing new materials, with an amount of about 250 million yuan (+ 103.6%); ② It is estimated that the sales amount of carbon fiber and other products to Jilin Baojing carbon material company and Jilin Guoxing composite material company is about 600 million yuan (+ 43.2%); It is estimated that the large difference between the above amount and the actual amount of the previous year is due to the increase in output in 2022; 2) According to the disclosure on the official website of Jilin provincial government, by the end of 2021, Jilin Chemical Fibre Co.Ltd(000420) group’s raw silk (the business is undertaken by Jilin Carbon Valley) production capacity has reached 60000 tons (40000 tons by the end of 2020). It is expected that the raw silk production capacity will reach 200000 tons in 2022, with a considerable increase in production capacity; 3) From the historical financial data of Jilin Carbon Valley, the scale effect of carbon fiber precursor is obvious. With the expansion of scale, the unit precursor cost of the company is expected to show a downward trend.
Investment suggestion: it is estimated that the net profit attributable to the parent company from 2021 to 2023 will be RMB 310 / 580 / 940 million respectively, and the corresponding PE will be 59x / 31x / 19x respectively, maintaining the “recommended” rating.
Risk warning: the commissioning progress of the new project is lower than the expected risk, and the release progress of downstream demand is lower than the expected risk.
