\u3000\u3000 Guizhou Redstar Developing Co.Ltd(600367) (600367)
Event: the company recently released the performance forecast for 2021: it is expected that the net profit attributable to the company in 2021 will increase by 165 million yuan to 24 million yuan year-on-year, 299.44% to 435.54% year-on-year; The net profit after deducting non-profit is expected to be 210 million yuan to 300 million yuan, which will turn from loss to profit compared with the same period of last year.
Q4 performance reached a record high and exceeded expectations. According to the calculation of non deduction median caliber, the non deduction net profit in 2021 was 255 million yuan, reaching a new high since the company was listed; The non net profit deducted from Q4 was 123 million, also reaching a record high, an increase of 81% over the 67.83 million yuan of Q3, exceeding our previous profit expectation.
Driving forces of growth: (1) in 2021, the market demand recovered, the price of the company’s main products rebounded, the price of barium carbonate, strontium carbonate, barium sulfate, sulfur, thiourea, battery grade lithium carbonate and other main products continued to rise, and the sales revenue and profit increased year-on-year; (2) The company actively develops markets outside China. The sales revenue and profit of some products such as high-purity barium carbonate, barium chloride, barium sulfate, high-purity strontium carbonate, electrolytic manganese dioxide, high-purity manganese sulfate and battery grade lithium carbonate increased year-on-year; (3) Guizhou Songtao Hongxing electrochemical Mining Co., Ltd., a subsidiary of the company, and Wanshan Pengcheng Mining Co., Ltd., produced stably and expanded sales channels. The sales volume of manganese carbonate ore increased year-on-year, which improved the overall benefits of the company; (4) Guizhou Guizhou Redstar Developing Co.Ltd(600367) Dalong manganese industry, a subsidiary of the company, benefited from factors such as the rise in the price of manganese series products;
The company’s main business includes manganese products and inorganic salt business (barium salt and strontium salt). Among them, the production capacity of barium carbonate is 290000 tons and that of barium sulfate is 55000 tons, ranking first in China and even the world, with a market share of about 40%. In 2020, the company will produce 231428 tons of barium carbonate, 4116 tons of high-purity barium carbonate, 3369 tons of high-purity barium chloride and 50823 tons of barium sulfate; The production capacity of strontium carbonate is 30000 tons, accounting for 30% of the market, and the output will be 23765 tons in 2020. Production capacity of manganese series products: electrolytic manganese dioxide (EMD) 30000 tons / year, high-purity manganese sulfate 30000 tons / year and manganese ore 250000 tons / year. In the first three quarters of 2021, the company achieved 19714 tons of electrolytic manganese dioxide and 15223 tons of high-purity manganese sulfate respectively. The annual output is expected to be 27313 tons and 20442 tons respectively.
The company is a leading enterprise of high-purity manganese sulfate in China, benefiting from the high growth of the industry. High purity manganese sulfate is currently used in ternary materials, benefiting from the rapid development of new energy vehicles. It is expected to make a rapid breakthrough in lithium manganate and lithium ferromanganese phosphate in the future. It will be well used in sodium battery cathode materials, lithium rich manganese based materials and cobalt free nickel manganese binary materials in the future, and take all the current and future new energy battery material systems. It can be said that the manganese source of lithium-ion battery mainly comes from high-purity manganese sulfate. If not, it should be converted from high-purity manganese sulfate. According to comprehensive calculation, the demand volume of high-purity manganese sulfate will reach 1.34 million tons in 2025, realizing a high-speed growth of 7 times in four years, with a compound growth rate of 70%, entering an unprecedented highlight moment in the industry.
Raise the profit forecast and maintain the “buy” rating. In general, we raised the company’s profit forecast: the net profit attributable to the parent company increased from the previous forecast of RMB 219 / 334 / 418 million in 2021-2023 to RMB 263 / 412 / 490 million, the corresponding EPS was RMB 0.89/1.39/1.66 respectively, and the PE corresponding to the current stock price (closing price of 2022.1.24) was 19 / 12 / 10 times respectively. Considering that the company is a scarce leader in the subdivision of new energy battery materials with high growth rate, we give the company a price earnings ratio of 25 times in 2022, with a corresponding share price of 34.75 yuan, 108% more room than the current share price (closing price of 16.69 yuan on January 24, 2022).
Risk tips: (1) the company’s capacity release is lower than expected; (2) The epidemic situation exceeded expectations and affected demand; (3) Risk of core technology leakage; (4) Risk of industrial policy change.
