Fangyuan shares is the main domestic supplier of high-nickel NCA precursors, and the largest downstream is Panasonic. With the continuous volume of global NCA demand and the gradual expansion of the company's production capacity, the company's performance will usher in rapid growth in the future.
The company is the main supplier of NCA in China. 1) the battery cathode materials have been ploughed deeply for 18 years, and the main products are NCA ternary precursors, NCM ternary precursors and spherical nickel hydroxide. 2) R & D investment is high, the proportion of R & D investment in revenue and the proportion of R & D personnel are in the forefront of the industry. The core technology covers smelting separation and material preparation, in which the "impurity extraction without nickel extraction" technology can effectively reduce the product cost. The high nickel NCA ternary precursor synthesis technology is very mature and is one of the main suppliers of Panasonic. 3) in the first half of this year, the downstream customer structure of the company significantly improved, the proportion of NCM ternary precursor business increased significantly, and the company's dependence on Panasonic decreased significantly, effectively reducing the negative impact caused by the change in the way of cooperation with Panasonic. 4) at present, the company has an annual production capacity of 36000 tons of high-quality NCA/NCM ternary precursors, and its subsidiary Fangyuan cycle and Fangyuan Lithium Energy respectively plan to put into construction high-end NCA/NCM precursor projects with an annual production capacity of 50,000 tons and 20,000 tons respectively, with a total production capacity of 100,000 tons / year expected by the end of 2022.
NCA has a broad prospect under high nickel content. 1) the rapid penetration of new energy vehicles has driven the demand for ternary precursors to maintain a high growth rate, and the average annual growth rate in the next five years is expected to reach 38%. In 2025, the demand for ternary precursors is expected to increase to 1.62 million tons. Ternary power batteries are the main driving force for growth, and energy storage batteries and 3C batteries will also bring a small increase. 2) Ternary precursors have high barriers to industry, with the characteristics of high technical barriers, high customer barriers and high resource barriers. Compared with NCM, NCA is more difficult to use aluminum instead of manganese. 3) the competition pattern of the ternary precursor market is relatively concentrated, with CR3 of about 40%, which is expected to continue to increase this year. The four major precursor manufacturers before 2020 are Zhongwei Co., Ltd., Bang Pu cycle, Grimmei and Huayou Cobalt Industry, with a market share of 17%, 13%, 10% and 8%, respectively. 4) the proportion of domestic NCA precursor shipments has increased steadily, mainly for export. Domestic enterprises that mass-produce NCA precursors are represented by Green Mei and Fangyuan Environmental Protection, which are basically used to export cathode material factories in South Korea and Japan. The total global demand for ternary precursors of NCA is expected to reach 280000 tons in 2025. 5) downstream battery factory in terms of NCA layout, Japan's Panasonic plans to carry out pilot production of 4680 batteries, and Samsung SDI expects mass production of Gen5 batteries in the third quarter.
Give a "highly recommended-A" investment rating. The company is expected to achieve net profit of 1.33,2.76 and 383 million yuan respectively from 2021 to 2023, with a price-to-earnings ratio of 102-49-35, covering for the first time and giving a "highly recommended-A" investment rating.
Risk hints: lower-than-expected sales of new energy vehicles, changes in technical routes, sharp decline in cobalt and nickel prices, lower-than-expected construction of new projects, dependence on a single customer, etc.
