\u3000\u3000 Shandong Fengyuan Chemical Co.Ltd(002805) (002805)
Key investment points
Oxalic acid industry leader, transformation of lithium battery cathode materials
The company is the top five oxalic acid supplier in China, with a market share of nearly 20%. After 2016, the company began to transform its lithium battery cathode material business. As of 2021q3, the company has 10000 tons of lithium iron phosphate capacity and 5000 tons of conventional ternary capacity; The total capacity under construction and planned is 200000 tons. 2021q1-q3 company achieved a revenue of 547 million yuan (+ 105%), of which the revenue of cathode material business accounted for 53.37% in the first half of the year; The net profit attributable to the parent company was 38.69 million yuan, turning losses into profits; The gross profit margin is 14.98% (+ 6.18pct).
The demand window for ferrophosphate was opened, and the permeability of high nickel continued to increase
By the end of 2020, the total capacity of China’s mainstream cathode manufacturers was 680000 tons, showing structural oversupply; According to the production expansion plan of leading enterprises, China’s cathode materials will reach at least 2 million tons by the end of 2023, and the trend of oversupply continues. With the implementation of electrochemical energy storage construction, the demand for lithium iron phosphate has opened a secondary growth, and the demand for iron phosphate by head battery enterprises has gradually increased; As a power battery material with better performance, the ternary permeability of high nickel continues to improve.
Phosphate iron ternary two wheel drive, Byd Company Limited(002594) contributes to the core increment
The company also distributes lithium iron phosphate and ternary materials, with a total of 200000 tons of cathode materials under construction and planning, enriching the product matrix to support channel expansion. The company continued to introduce high-quality customers: the company introduced benchmark customers Byd Company Limited(002594) in 2021, and the supply volume of Q3 Byd Company Limited(002594) accounted for nearly 50%. In November, the company signed an order of 800 million yuan with Guangzhou Great Power Energy&Technology Co.Ltd(300438) . The capacity utilization rate of 2021q3 company exceeded 80%, significantly higher than that in the first half of the year; We believe that the company is expected to expand downstream channels by relying on high-quality customers and continue to improve capacity utilization by relying on Byd Company Limited(002594) ; The scale effect is expected to be realized gradually.
Profit forecast and valuation
It is estimated that the company’s revenue from 2021 to 2023 will be RMB 830 / 36.6 / 7 billion, with a year-on-year increase of 132% / 343% / 91%, and the net profit attributable to the parent company will be RMB 0.5 / 2.5 / 560 million, with a year-on-year increase of 255% / 456% / 124%, corresponding to EPS of RMB 0.25/1.09/2.43. The current price corresponds to pe128 / 23 / 10 times. Based on the strong flexibility of the company’s capacity expansion and relying on the core customer Byd Company Limited(002594) , the scale effect is expected to be realized. The target price is 46.45 yuan and the “overweight” rating is given.
Risk warning: the expansion of production does not meet expectations; The demand for cathode materials did not meet expectations.
