Main points of investment
Jintian Copper: high turnover, stable profit, continuous growth of high-quality copper processing enterprise Jintian Copper's main products include copper processing products and magnetic materials, the weighted average annual production capacity from January to September 2020 is: copper wire row 520000 tons, copper rod 230000 tons, copper tube 170000 tons, copper plate and strip 120000 tons, electromagnetic wire 100000 tons, in addition, the current production capacity of NdFeB magnetic materials is 5000 tons. Copper processing accounts for 95% of revenue and 88% of gross profit. The company has been ploughing the copper processing field for more than 30 years, and thanks to the extremely high level of operation and management and digital and information-based business processes, the company's total asset turnover rate has been maintained at more than 4 for many years in a row. it is much higher than other processing enterprises in the same industry; the pricing model of "raw material price + processing fee" and fine management make the cost transmission effective, and the company's gross profit margin and net profit margin remain stable all the year round. The total output of copper products increased from 600000 tons in 2015 to 1.38 million tons in 2020, and the output doubled in the past five years, driving the performance steadily upward.
Copper processing: the concentration of the industry has increased and the competition pattern has improved. It is estimated that the production capacity of copper processing products will reach 2 million tons in 2022.
In the pattern of complete market competition, industry leading enterprises increase market share and industry concentration by virtue of scale effect, low cost and other advantages. Due to years of Red Sea competition in the copper processing industry, fixed asset investment has been stagnant for six years. We can see from the proportion of A-share large copper processing enterprises in the national copper output that the market share of large enterprises has increased from 11% in 2016 to 23% in 2020. Jintian Copper has survived the fierce competition in the Red Sea, become the leader of copper processing, and is continuing to expand its market share. With the convertible bond project put into production, it is expected that the total copper processing capacity will reach 2 million tons in 2022.
Electromagnetic flat wire: new energy drives the demand for high-end new materials, the company seizes the opportunity to expand production and capacity, and the production capacity will reach 20,000 tons by 2022.
Compared with the traditional motor, the flat wire motor has the advantages of high slot full rate, good heat dissipation performance, small size and low electromagnetic noise. The application of the electromagnetic flat line can improve the vehicle efficiency by about 20%. After the battery efficiency has been improved to a certain extent, attention has been paid to the improvement of motor efficiency. The new energy electromagnetic flat line has certification barriers and technical barriers. The company has ploughed the electromagnetic line for many years and has rich experience in electromagnetic wire research and development and production. At present, the company's electromagnetic flat wire products have entered the supplier system of well-known new energy automobile enterprises. Has entered the stage of mass production. At present, the company is actively planning and expanding the production capacity of electromagnetic flat lines, and it is estimated that by 2022, the production capacity of new energy electromagnetic flat lines will reach 20,000 tons, and the follow-up expansion plan will be decided according to the market situation.
Magnetic materials: new energy vehicles, wind power and frequency conversion air conditioners and energy-saving motors have an explosive demand for NdFeB magnetic materials. The company's production capacity of 8000 tons of magnetic materials is under construction.
The company began to distribute magnetic materials business in 2001, and has entered the supply chain of many well-known enterprises, such as CRRC Corporation, German AMK, German Bozer Group, Italian Rafa and so on. At present, the Ningbo base has a production capacity of 5000 tons; the Baotou base is under investment and construction. The first phase of the production capacity of 4000 tons is expected to be completed in August 2023, and the second phase of 4000 tons capacity will be completed in December 2025, with a total production capacity of 13000 tons of NdFeB.
Profit forecast and valuation
It is estimated that the company's operating income will be 75.06 billion yuan, 79.777 billion yuan and 93.635 billion yuan from 2021 to 2023, and the net profit will be 719 million yuan, 972 million yuan and 1.280 billion yuan respectively. The current price corresponding to PE is 19.68,14.56,11.05 times. Based on the company's growth expectations, the company is valued at 20 times the average valuation of the comparable company, corresponding to a market capitalization of 19.5 billion, with a target price of 13.14 yuan. It now has 35% room to rise, covering it for the first time and giving it a "buy" rating.
Risk hint
1. The risk of large fluctuations in copper prices; 2. Copper processing industry concentration increased less than expected risk; 3. The Fed sharply tightened liquidity risk; 4. The risk of the development of new energy automobile industry is not as good as expected.