Events:
The company issued the 2021 performance forecast on January 28th. It is estimated that the net profit of the shareholders belonging to the listed company in 2021 will be a loss of 1.275-172.5 million, and the net profit after deducting non-recurring profit and loss will be 1.33-181 million yuan.
At the same time, the company announced that it intends to invest 5 billion yuan (including 3.5 billion yuan in fixed assets) to build a production base of key cathode materials for lithium batteries in the Metallurgical Materials processing Zone of Mengzi Economic and technological Development Zone, with an annual production line for treating 45000 tons of metal waste lithium batteries and electrode materials, with an annual output of 60,000 tons of precursors, 20,000 tons of lithium carbonate and 20,000 tons of cathode materials. The construction period of the project is 4 years and is divided into three phases.
Among them, the first phase of the project has a total investment of 900 million yuan (including 600 million yuan in fixed assets) to build an annual production line for treating 11000 tons of metal waste lithium batteries and electrode materials, with an annual output of 15000 tons of precursors, 5000 tons of lithium carbonate and 10,000 tons of cathode materials.
The core point of the report
Note: reduce the historical burden of low value-added channel end of LED lighting, expand production: actively create large-scale strategic layout of lithium cathode materials
It is easy to see that the majority of the predicted losses of more than 100 million are the provision for impairment of goodwill provided by Zhejiang Jiongda and CIC photovoltaics acquired in 2017 and 2018, totaling 79 million yuan; the credit impairment is about 36 million yuan; these two items have reached about 115 million. Others are also affected by the incremental cost of about 40 million over the same period last year. It is easy to see that the loss of bad debts and impairment of goodwill mainly come from the traditional channel direction of LED lighting, which has limited room for advanced growth, and is obviously not the main body in the development of overclocking III in the future, so as to clean up its negative effects at this stage, but also for the normal growth of the follow-up main business to be smoothly reflected at the end of the statement, no longer dragged down by these historical burdens.
In addition to the performance forecast, the company's production expansion announcement for the construction of a production base for lithium battery cathode materials in Mongolia is the top priority of our discussion this time, because on the one hand, this production expansion proves that listed companies attach importance to the development direction of lithium battery cathode materials, on the other hand, it also gives a reference in terms of growth volume that can be compared with other excellent listed companies in the same industry.
Sheng Bi he: an important bridgehead towards the key materials for the cathode of lithium batteries, which was acquired by the company in 2018, and then gradually completed its controlling holdings. It is one of the first high-tech enterprises in China to enter the research, production and sales of lithium-ion battery materials. Its main business includes the recycling of waste battery resources, precursor products, lithium-ion battery cathode materials and core equipment design and manufacturing.
Under the background of the rising price of raw materials upstream of lithium battery and the fact that supply exceeds demand, Sanbi and this kind of company with full-process closed-loop capability will be very competitive, because the upstream of the company comes from the disposal of waste batteries rather than traditional lithium mines, and products such as precursors to lithium carbonate and cathode materials can be self-made, basically unaffected by the supply and price fluctuations of upstream mineral products. In order to compete for material resources in the out-of-stock environment, downstream battery manufacturers will basically pre-lock production capacity in advance, and the prepaid proportion of procurement is very high, so the growth of Sanbi and is very certain. The company announced that it will invest heavily in expanding the production capacity of cathode materials related to lithium batteries, and simply estimate that even after the first phase of the project reaches production, it is expected to increase the sales scale by about 2 billion. Sanbi and the future growth path and incremental iteration are very clear.
Considering the superiority of Sanbi and this recycling model, as well as the continuous layout and expansion space in the field of lithium materials, including the replicability of its technological path, we judge that overclocking 3 even if only look at the growth space of Sanbi, with reference to the development trajectory of companies such as Grimme, Zhongwei and Rongbai in the industry, the current market capitalization of more than 3 billion listed companies is obviously undervalued.
Advanced traditional business: heat dissipation devices broaden new applications; traditional LED lighting gradually shrinks and focuses on high-power applications, and the road ahead is still broad and promising.
The traditional products of overclocking 3 are PC radiator, LED lighting and heat dissipation devices. Relying on mature heat dissipation technology and industrial design advantages, the company will continue to actively focus on developing smart terminals of mobile phones, new heat dissipation devices of AR/VR (miniaturization, efficient conduction), large servers and computing facilities, 5G base stations, etc. (industrial, high power and high heat) while consolidating the traditional business. New energy vehicles, large capacity batteries and other (power, energy storage and other long cycle, medium and high power) emerging heat dissipation applications, continue to broaden the company's growth margin.
The company's annual performance forecast loss in 2021, according to the company's announcement, the annual report includes the goodwill impairment of Hangzhou Jiongda and CIC Optoelectronics in LED related business areas, as well as the credit impairment against bad debt losses. obviously, the company has fully recognized the bottleneck of traditional LED lighting business and gradually shrank its low value-added ordinary LED lighting channel end business in the future. Focus on the high-power LED product direction that can give full play to the advantages of the company's heat dissipation devices, reduce the loss burden, give full play to the company's advantages in heat dissipation industrial design and manufacturing, get rid of the low value-added competition trap of LED engineering and channels, enhance profitability, and return to the main growth track.
Profit forecast and rating: cover for the first time and give buy rating. Through the performance forecast and the production expansion announcement of cathode materials a few years ago, the company is based on traditional heat dissipation devices, gradually shrinking the low value-added business of LED traditional lighting, deeply ploughing 5G base stations, intelligent terminals, power vehicles, energy storage and other emerging heat dissipation applications, and relying on the subsidiary Sheng Bi he, the business focus is rhythmically focused on lithium cathode key materials. The development path of gradually realizing the large-scale strategic layout of the corresponding field has been very clear. We estimate that the company's profit from 2021 to 2023 will be-1.48,0.67 and 159 million yuan respectively, and the current market value will be-24.80,54.54,23.11 times respectively.
Risk tips: (1) the company's lithium cathode material production expansion progress is not as expected; (2) upstream and downstream material prices fluctuate sharply, leading to changes in the company's growth assumptions; (3) traditional LED lighting business drag more than expected, resulting in sustained local business losses; (4) intensified competition in the industry.