\u3000\u3000 Keda Industrial Group Co.Ltd(600499) (600499)
Events
The company recently released the performance forecast for 2021: during the reporting period, the company realized the attributable net profit of 1-1.05 billion yuan, with a year-on-year increase of 282.40% – 301.52%, and the attributable net profit after deduction was 941-991 million yuan, with a year-on-year increase of 9297.28% – 9796.43%. In this regard, our comments are as follows:
The performance increased greatly, and the three business segments grew together
In 2021, the attributable net profit of the company was 1-1.05 billion yuan, with a year-on-year increase of 282.40% – 301.52%, and the attributable net profit after deduction was 941-991 million yuan, with a year-on-year increase of 9297.28% – 9796.43%, which was in line with market expectations. The significant increase in performance is mainly due to the resonance of three major businesses: 1) benefiting from the epidemic, the import of African building ceramics is limited, and the company’s African building ceramics business has increased its production capacity and gross profit margin; 2) Building materials machinery has benefited from the demand driven from outside China, and the full orders have driven the steady growth of performance; 3) Lanke lithium industry benefited from the rising price of lithium carbonate and the release of production capacity, ushering in the stage of simultaneous rise in volume and price.
Building materials machinery: the business recovers steadily and waits for the improvement of profitability
In 2021, the company’s building materials machinery recovered significantly, mainly because: 1) the demand for new downstream products rock sector drives the growth of ceramic machinery, and the market share of the company’s rock sector production line is in the leading position in the industry; 2) After the downstream ceramic factories went through capacity removal, the market share of leading enterprises increased, and they were faced with the transformation demand of intelligent production line; 3) The company’s Italian maspe thick brick production line was successfully put into operation, announcing that Chinese ceramic equipment has officially entered the overseas high-end market. In the first half of the year, the company’s building materials machinery business achieved a revenue of 2.869 billion yuan, a year-on-year increase of 100.96%, which is close to the annual level of 2.977 billion yuan in 2019. Looking forward to 2022, China’s demand for intelligent transformation of rock slab and production line is still growing. In 2021, overseas markets affected by epidemic shipments will rebound. In addition, subject to the impact of the rise in the price of steel and other raw materials in 2021, the gross profit margin of building materials machinery business will hit the bottom and rise in 2022. In addition, the company focuses on the main business and implements fine management, and the profitability of building materials machinery business is expected to be improved.
Building ceramics: new production lines and new products are expanded simultaneously, and steady growth can be expected
The company began to invest in building ceramics business in Africa in 2016. At present, the company has built 12 ceramic production lines in Kenya, Ghana, Tanzania, Senegal and Zambia, with a production capacity of more than 70 million square meters per year. The average market share in these countries is as high as 50%. In the first half of 2021, the company achieved a revenue of 1.062 billion yuan and a net profit of 352 million yuan, an increase of 23.67% year-on-year respectively 84.21%。 The company has planned the fourth phase and fifth line of Ghana ceramic factory, Kisumu factory in Kenya, Cameroon, C ô te d’Ivoire and other countries’ building ceramic projects, which are expected to be put into operation in 2022, and the production capacity will exceed 100 million square meters in 2-3 years. In addition, the company is also actively carrying out research and exploration of new products, Position Africa’s business as transforming from a professional ceramic tile manufacturer into a one-stop home center, realize the coverage of high, medium and low-end home products in Africa, and establish a complete home category ecology. The company continues to dig deep into the African market, the current production line and new products are expanded simultaneously, and the African business can grow steadily.
Lanke lithium: the new 20000 ton project is gradually put into operation and has entered the stage of simultaneous increase in volume and price
Lanke lithium (43.58% equity), a joint-stock company, produced and sold 22700 / 19200 tons of lithium carbonate in 2021, including 3500 tons of inventory, which is expected to be sold in 2022q1. The new 20000 ton battery grade lithium carbonate project of Lanke lithium industry has been officially commissioned and has begun to produce products. At present, Lanke lithium industry has a daily output of more than 100 tons of lithium carbonate, and the annual output is expected to exceed 30000 tons in 2022. With the rise of lithium carbonate price, Lanke lithium industry will welcome the stage of simultaneous increase of volume and price, and the investment income of the company will be improved.
Profit forecast
It is predicted that the company’s revenue from 2021 to 2023 will be 9.377 billion yuan, 10.999 billion yuan and 12.116 billion yuan respectively, and the attributable net profit will be 1.035 billion yuan, 3.614 billion yuan and 3.898 billion yuan respectively, corresponding to 34, 10 and 9 times of the current share price PE respectively. It will be covered for the first time and given a “recommended” investment rating.
Risk tips
Macroeconomic downside risk, slow progress of overseas projects, lower than expected capacity expansion and sales of Lanke lithium industry, lower than expected demand for lithium battery, lower price of lithium carbonate, higher price of raw materials, further intensification of covid-19 epidemic and reduction of shareholders’ holdings.
