Fangyuan shares: deep ploughing ternary precursor, rapid expansion of production capacity. Founded in 2002, the company has profound technical accumulation and rich production experience in the field of battery materials, and is a leading domestic manufacturer of lithium battery NCA cathode material precursors. Relying on the independent research and development of the core patent "extraction and non-extraction of nickel", the company produces NCA, NCM ternary precursors and spherical nickel hydroxide as cathode material for nickel batteries. In the first half of 2021, the company's NCA precursors, NCM precursors and spherical nickel hydroxide accounted for 62.10%, 25.21% and 5.17% of revenue, respectively. In terms of production capacity, the company has an existing production capacity of 36,000 tons / year of NCA/NCM ternary precursors, with an additional production capacity of 50,000 tons / year expected in 2022 and a planned production capacity of 25,000 tons / year. In addition, the company is expected to build a capacity of 10,000 tons / year of lithium hydroxide in 2022, with another planned capacity of 0.6 thousand tons / year.
High-end certification: NCA into Panasonic Tesla, Inc. industrial chain. The technical barrier of NCA precursor is high and the production process is complex. At present, there is no extensive breakthrough in China. The company early mastered the key process technology of high-nickel NCA ternary precursors, and began to sell high-nickel NCA precursors to Panasonic in 2017 for the production of Tesla, Inc. matching power batteries. Relying on major customers, the company ranks first in the export volume of NCA ternary precursors in China in the past three years, the revenue accounts for more than 70%, and the gross profit margin ranks first in all the company's businesses, laying a solid foundation for the company's revenue and profit growth.
Panasonic 4680 battery production is imminent, the company has broad prospects for NCA business.
Pioneering and enterprising: NCM expands rapidly and lithium hydroxide thickens profits. In order to comply with the domestic and international development trend, the company has made great efforts to expand the NCM precursor business in recent years. The company currently has NCM523, NCM5515, NCM83 and other products, and has cooperated with customers such as Bertre, Shanshan Energy, Tianli Lithium Energy, Ke Heng, Golden Fuli and Thornton New Energy, and the source of customers continues to expand. As the new production capacity is completed and put into production, NCM revenue capacity is expected to be further enhanced. In addition, the company makes a forward-looking layout in the field of power battery recycling, taking a stake in Veolia New Energy Company, which currently accounts for 20% after capital increase. Through the layout recovery company, we can not only obtain rich nickel and cobalt resources for the production of ternary precursors, reduce the procurement cost of raw materials, but also extract lithium element to produce lithium hydroxide for export and increase the company's profits.
Profit Forecast: we expect the company's operating income from 2021 to 2023 to be 2.245,33.25 / 5.534 billion yuan, the net profit to return to the mother is 1.08 million, the EPS is 0.21, 0.58, and the PE is 63.08, 24.48 times. Cover for the first time, giving a "buy" rating.
Risk hint: capacity expansion is not as expected; downstream demand is not as expected; industry competition is intensified.
