\u3000\u3000 Jiangsu Cnano Technology Co.Ltd(688116) (688116)
Event: on January 24, 2022, the company disclosed the issuance plan of convertible bonds. It plans to issue the company’s convertible bonds to unspecified objects, with a total amount of no more than 830 million yuan. The funds are mainly invested in the production project of carbon based conductive material composite products. The total investment is about 1 billion yuan, and it plans to invest 830 million yuan to raise funds. The convertible bonds are issued at par value, with a par value of about 100 yuan each; The issuance period is 6 years, from January 27, 2022 to January 26, 2028, of which the coupon rates from 2022 to 2028 are 0.30%, 0.50%, 1.00%, 1.50%, 1.80% and 2.00% respectively. The initial conversion price of convertible bonds issued this time is 153.67 yuan / share.
The convertible bond project will add 50000 tons of slurry, 5000 tons of conductive masterbatch and 3000 tons of carbon tube purification capacity. The project is planned to be implemented in Changzhou tiannai (Changzhou Taihu science and Technology Industrial Park) in two phases. In the first phase, it will be completed with an annual output of 20000 tons of conductive slurry, 2000 tons of conductive masterbatch and 1500 tons of carbon tube purification; Phase II will build an annual production capacity of 30000 tons of conductive slurry, 3000 tons of conductive masterbatch and 1500 tons of carbon tube purification. The total construction period of the project is 58 months, from March 2021 to December 2025, including 10 months of preliminary preparation and 48 months of construction period (24 months for phase I and 24 months for phase II); The phase I capacity is expected to be delivered in June 2023 and the phase II capacity is expected to be delivered in June 2025. The 50000 tons of carbon tube slurry added this time are all high value-added production capacity. It is estimated that the production capacity of the second generation, third generation and new generation (single / double wall tube) carbon tube slurry will be 30000 tons, 15000 tons and 5000 tons respectively. In the future, after the project is completed, it is expected to increase the main business income by 2.325 billion yuan, the net profit attributable to the parent company by 320 million yuan, the IRR is about 28.77% (after tax), and the static payback period is about 6 years.
The existing and planned production capacity ranks first in the industry, with significant scale advantages. In addition to the convertible bond project, two new projects are steadily advancing: 1) the IPO project plans to build a capacity of 6000 tons of carbon nanotubes + 180 million tons of conductive slurry (first and second generation) + 2000 tons of conductive masterbatch + 300 tons of nano carbon materials + 900 tons of by-product hydrogen, which is expected to be put into production in 2023; 2) The tiannai project in the United States plans to build an annual production capacity of 8000 tons of conductive slurry, which is planned to be put into operation in 2023. The company has an existing slurry capacity of 30000 tons / year. By 2025, it will build a total capacity of 8000 tons of CNT powder + 106000 tons of conductive slurry + 7000 tons of conductive masterbatch, and will be intensively put into operation since 2023.
Carbon nanotubes have been deeply cultivated for 15 years, with leading product performance and customers covering China’s first-class lithium battery enterprises. At present, the company has mass produced the first to third generations of multi wall carbon nanotubes, and has the ability to mass produce single wall carbon nanotubes. The product performance is significantly worse than that of its competitors. The global competitor of the third generation of products is only LG, and the global competitor of the new generation of single wall carbon nanotubes is only Russian ocsial. The product premium advantage is obvious, and the gross profit margin is maintained at about 35%. At present, customers include China’s first-class lithium battery enterprises such as catl, Byd Company Limited(002594) , ATL, and the Meizhong Huada factory supporting Tesla is actively promoting the construction stage.
The lithium battery field of the main track continues to be booming, while developing new applications in non lithium battery fields, with a broad market space. The company has developed carbon nanotube conductive masterbatch and expanded the application scenario of carbon nanotube to the field of conductive plastics. At present, the company has completed the preliminary sample test with SABIC, a world-famous chemical company, and is promoting the preparation for subsequent mass production. In the field of chip manufacturing, the company has cooperated with nantero of the United States, and high-purity carbon nanotube products have begun to send samples for testing. We expect that the market space of slurry + conductive masterbatch will be nearly 40 billion in 2025, and the CAGR will be 40% in five years.
Investment suggestion: we expect the net profit of the company from 2021 to 2023 to reach 316 million yuan, 585 million yuan and 1047 million yuan, corresponding to the PE level at the current price of 112.5, 60.7 and 33.9 times respectively. Considering the rapid development of the industry, the accelerated volume of carbon nanotubes and the gradual introduction of new products, the company, as a leader, has prominent advantages in scale, products, customers and growth, and continues to give a “buy” rating
Risk tip: there is a risk that the production capacity falls short of expectations, the price fluctuation of raw materials, the risk that the epidemic will affect the end consumer demand, and the risk of error in the calculation of market scale and gross profit margin.
