Event: Nord shares disclosed its annual report for 2021, that the company's operating income in 2021 was 4.45 billion yuan, an increase of 106% over the same period last year; its net profit was 410 million yuan, up 7422% over the same period last year; and 380 million yuan was deducted from non-net profit, an increase of 843% over the same period last year. Of this total, 21Q4's revenue was 1.21 billion yuan, up 53% from the same period last year, down 1.5% from the previous month; the net profit from its mother was 84 million yuan, up 284.7% from the same period last year and down 30.47% from the previous year.

The volume and price of the company's products have risen, and the performance in 2021 is in line with expectations. In 2021, the company achieved operating income of 4.45 billion yuan, an increase of 106% over the same period last year, and a net profit of 410 million yuan, an increase of 7422% over the same period last year. Among them, the operating income of Q4 company was 1.21 billion yuan, up 53% from the same period last year, down 1.5% from the previous year; the net profit from the home was 84 million yuan, up 284.7% from the same period last year, down 30.47% from the previous year. The increase in profitability in the past 21 years is mainly due to the high prosperity of lithium electricity downstream, driving up the company's copper foil shipments and processing fees. The company's copper foil sales increased to 35074 tons from 203.04 million tons in 2020. In addition, the processing fee of lithium copper foil industry will increase by 0.5-10,000 yuan in 2021. Taken together, the gross profit per ton of the company's copper foil business increased from 1.76 in 2020 to 287,000 yuan per ton in 2021, and the proportion of gross margin increased from 81.1% in 2020 to 91.5% in 2021.

Attach importance to research and development, the expense rate decreased significantly during the period. In 2021, the company's expenses increased by 31% to 590 million yuan compared with the same period last year, and the expense rate during the period was 13.3% from 20.9% →, a decrease of 7.61pcts over the same period last year. Specifically, the sales expenses increased by 46% to 37 million yuan compared with the same period last year, and the expense rate during the period increased from 1.18% → 0.83%, which decreased by 0.3pcts; the administrative expenses increased by 28% to 180 million yuan, and the administrative expense rate increased from 6.5% → 4.0%, down 2.4 pcts; the financial expenses increased by 4.9% to 220 million yuan, and the financial expense rate increased by 9.9% → 4.9%, which decreased by 4.9pcts R & D expenditure increased by 113% to 160 million yuan over the same period last year, and the R & D expenditure rate increased by 3.4% → 3.5%, an increase of 0.1pcts over the same period last year.

The company accelerates the process of production expansion and forms a stable supply relationship with high-quality customers. The company currently has two major copper foil bases in Qinghai and Huizhou, with a total production capacity of 43000 tons. The Qinghai base has a production capacity of 15000 tons under construction; the Huizhou base has now completed commissioning and started mass production of 12000 tons of new capacity. In addition, the company is also planning to build a 15000-ton copper foil project at the Qinghai base; the 50, 000-ton Huangshi project is expected to be put into production in mid-2023, with a production capacity of 135000 tons. We expect the company's production capacity to reach 70,000 tons by the end of 2022. From the perspective of customer structure, the company relies on technological advantages to maintain stable cooperation with customers such as CATL, BYD, CNAC Lithium, Guoxuan Hi-Tech, Yiwei Lithium Energy and Funeng Technology in the domestic market, while also supplying bulk products to overseas customers such as LG Chemical, Panasonic, ATL and SKI.

The company's volume is just around the corner, and its performance has entered a period of high growth. We assume that the processing fee will remain unchanged from 2022 to 2024, and the processing fee of 4.5 $6 / 8 μ m will be 10,000 yuan / ton on 7-5-4 respectively. Affected by the epidemic, we have reduced the company's production in 2022. It is estimated that the output of copper foil in 2022-2024 will be 5.5pm, 80max and 112,000 tons, corresponding to the net profit of RMB 8.07,11.51 and 1.553 billion respectively in 2024 (RMB 85710,057 million before 22-23). Based on the market capitalization of 159 billion on April 22, the corresponding PE of the company from 2022 to 2024 is 20x, 14x and 10x, respectively. Maintain the company's "buy" rating.

Risk reminder events: project construction schedule is not as expected; risk of industrial policy fluctuations; sales of new energy vehicles are not as expected; industry capacity release is higher than expected; epidemic risk; substantial upward risk of raw materials; downside risk of processing fees.