Event: the company recently issued a performance forecast for 2021: it is expected that the net profit in 2021 will increase by 165 million yuan to 240 million yuan compared with the same period last year, an increase of 299.44% to 435.54% over the same period last year; deducting non-net profit is expected to be 210 million yuan to 300 million yuan, which will turn a loss into a profit compared with the same period last year.
Q4 performance is at an all-time high, exceeding expectations. According to the caliber of deducting non-median, the deducted non-net profit in 2021 was 255 million yuan, reaching the highest level since the company went public. Q4 deducted non-net profit was 123 million, also reaching an all-time high, an increase of 81% over the 67.83 million yuan of Q3, exceeding our previous profit expectations.
Growth drivers: (1) in 2021, the market demand picked up, the prices of the company's main products rebounded, and the prices of major products such as barium carbonate, strontium carbonate, barium sulfate, sulfur, thiourea and battery-grade lithium carbonate continued to rise. Sales revenue and profits increased year-on-year (2) the company actively develops domestic and foreign markets, and the sales revenue and profits of some products of high-purity barium carbonate, barium chloride, barium sulfate, high-purity strontium carbonate, electrolytic manganese dioxide, high-purity manganese sulfate and battery-grade lithium carbonate are year-on-year growth. (3) the company Sun Company, Guizhou Songtao Hongxing Electrochemical Mining Industry and its subsidiary Wanshan Pengcheng Mining Industry have stable production, expanded sales channels, and the sales volume of manganese carbonate ore has increased compared with the same period last year. (4) the company's subsidiary Guizhou Hongxing develops Dalong manganese industry and benefits from the rising prices of manganese products.
The company's main business includes manganese products and inorganic salt business (barium salt and strontium salt). Among them, barium carbonate has a production capacity of 290000 tons and barium sulfate has a production capacity of 55000 tons, ranking first in the country and even first in the world, with a market share of about 40%. In 2020, the company produced 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; strontium carbonate production capacity of 30,000 tons, market share of 30% of the annual output of 23765 tons. Production capacity of manganese products: electrolytic manganese dioxide (EMD) 30,000 tons / year, high purity manganese sulfate 30,000 tons / year and manganese ore 250,000 tons / year. In the first three quarters of 2021, the company achieved an output of 19714 tons of electrolytic manganese dioxide and 15223 tons of high-purity manganese sulfate, with an expected annual output of 27313 tons and 20442 tons respectively.
The company is a leading enterprise of high purity manganese sulfate in China, benefiting from high growth in 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 rapid breakthroughs in lithium manganate and lithium ferromanganese phosphate in the future. in the future, there will be good applications in sodium battery cathode materials, lithium-rich manganese-based materials and cobalt-free nickel-manganese binary materials. It can be said that the manganese source of lithium-ion battery mainly comes from high-purity manganese sulfate, even if it is not, it should be converted from high-purity manganese sulfate. According to comprehensive estimates, the demand for high-purity manganese sulfate will reach 1.34 million tons in 2025, achieving a rapid growth of seven times in four years, with a compound growth rate of 70%, entering an unprecedented highlight moment in the industry.
Raise earnings forecasts and maintain "buy" ratings. To sum up, we raise the company's profit forecast: the net profit of homing company is raised from the last forecast of 2021-2023 to 263, 334 and 490 million, corresponding to EPS of 0.89, 1.39 and 1.66, respectively, and the PE of the previous share price (closing price of 2022.1.24) is respectively times that of 19-12-10. Considering that the company is a scarce leader in the segmentation of high-growth new energy battery materials, we give the company a price-to-earnings ratio of 25 times earnings in 2022, corresponding to a share price of 34.75 yuan, which is still 108% higher than the current share price (2022.1.24 closing price 16.69 yuan).
Risk tips: (1) the company's capacity release is lower than expected; (2) the epidemic exceeds expectations and affects demand; (3) the risk of core technology leakage; and (4) the risk of industrial policy change.