Events:

The company released operating data from January to February 2022 and realized total operating income of about 1.14 billion yuan, an increase of about 13.7% over the same period last year, and a net profit of about 310 million yuan, an increase of about 97.7% over the same period last year.

Investment Summary:

Quanzhou production capacity smoothly put into operation, electrolytic liquid scene demeanor continues to cash. The 440000 tons / year new energy material project (the first phase) invested by the company's holding subsidiary has been successfully put into operation, and battery-grade ethylene carbonate products have been produced. Another 100,000 tons / year dimethyl carbonate plant is still in trial production. The carbonate products of the first phase of the project include 20,000 tons / year battery grade vinyl carbonate, 100,000 tons / year industrial grade vinyl carbonate, 20,000 tons battery grade dimethyl carbonate and 80,000 tons / year industrial grade dimethyl carbonate. From January to February of 2022, the company's new energy-related products remained at full capacity, and the prosperity of the products continued to be realized, with a net profit of about 310 million yuan, an increase of about 97.7 percent over the same period last year.

The vertical integrated layout of the electrolyte accelerates the expansion of production capacity. The company is one of the few enterprises in the market that can provide ultra-pure electrolytic solvents, with the advantages of complete industrial chain and high-end product purification technology, with a global market share of about 40%, accounting for about 70% of domestic electrolyte solvent exports. In the future, the company's carbonate series products will be extended vertically to the electrolyte, and it is planned to invest 300,000 tons / year in the electrolyte project, with a total investment of 1.6 billion yuan. It is expected to be completed and put into production in February 2023, when an integrated production system will be formed. At the same time, the company's solvent capacity is in the stage of accelerated expansion, and the future 100,000 t / a methyl ethyl carbonate plant project is expected to be put into production in December 2023, consolidating the company's leading position in the field of carbonate solvents.

The horizontal layout of silicon-carbon negative electrodes, wet electronic chemicals, new energy materials and other projects give new impetus to growth. The company has a certain accumulation of silicon-carbon negative electrode technology, at present 1000 tons / year silicon-carbon negative electrode device is in the stage of trial production, has entered the customer sample testing work. In the future, the company plans to invest in the construction of 20,000 tons / year silicon-based negative electrode and 11,000 tons / year additive project, the construction period is 24 months, is expected to be completed and put into production in December 2023, the project investment is expected to be 730 million yuan and 280 million yuan respectively. In addition, the company plans to invest 1.633 billion yuan to build 40,000 tons / year new energy materials project, including 20,000 tons / year positive lithium supplement project, 10,000 tons / year new conductive agent project, 10,000 tons / year fluorinated solvent project, the construction period is 24 months, it is expected to be completed and put into production in February 2024. With the construction and production of related production capacity, it will further enrich the company's product structure, enhance profitability and comprehensive competitiveness, and inject new impetus into the company's development.

Investment advice: taking into account the continued prosperity of the company's main products, supporting performance growth, while new expansion projects to help the company's future growth. We estimate that the revenue from 2021 to 2023 will be 65.88,77.44 and 9.035 billion yuan respectively, and the net profit will be 12.08,15.21 and 1.807 billion yuan respectively, and the corresponding EPS will be 5.96,7.51,8.91 yuan respectively, and the PE will be 25.03,19.87,16.73 times respectively.

Risk hint: the production of the project under construction is not as expected, and the price of the product falls.