Main points of investment
Event: revenue of 3.779 billion yuan in 2021, an increase of 5.2%, net profit of 151 million yuan, an increase of 146.8%, and a deduction of 88 million yuan, an increase of 1819.8% over the same period last year, in line with our expectations. In the first quarter of 2022, revenue reached 944 million yuan, an increase of 30.0%, a net profit of 89 million yuan, an increase of 121.2%, and a deduction of 78 million yuan, an increase of 112.7%. That's what we expected.
Jintai Pavilion continues to increase, and the first quarterly report in 2022 is close to the forecast limit. Jintai Pavilion, the core subsidiary of lithium cycle, continued to grow. The revenue of 2021 annuity Taige was 988 million yuan, an increase of 143.9%, and a net profit of 224 million yuan, an increase of 655.7%. The company maintained a high growth trend in the first quarter of 2022. The company achieved a net profit of 89 million yuan in the first quarter of 2022, an increase of 121.2%. The deduction of 78 million yuan for non-return was 112.7%, and the deduction for non-return was close to the upper limit of performance forecast of 80 million yuan.
Lithium cycle business income increases to improve profitability. In 2021, the revenue of lithium cycle business increased by 214.1% to 896 million yuan, with a gross profit margin of 35.68%, with an increase of 13.24pct. Jintai Pavilion has full production throughout the year, producing 1792 tons of lithium carbonate, with an average lithium recovery rate of 85%. As of December 31, 2021, Jintai Pavilion has a waste lithium battery disposal capacity of 20,000 tons / year, corresponding to lithium carbonate capacity of 2000 tons / year and cobalt-nickel-manganese 3500 gold tons / year. Jintai Pavilion will start the technical transformation and expansion project in the second half of 2021. After the project is put into production, Jintai Pavilion will form a disposal capacity of 50,000 tons / year of waste ternary lithium batteries, corresponding to 5000 tons of lithium carbonate and 12000 gold tons of cobalt, nickel and manganese per year.
The profit margin of the equipment manufacturing business is under pressure, waiting for profits to recover. In 2021, the company's intelligent equipment revenue increased by 2.69% to 1.57 billion yuan, with a gross profit margin of 16.54%, with a decrease of 3.19 pct; circular equipment revenue increased by 12.88% to 453 million yuan, with a gross profit margin of 17.72%, with an increase of 2.44 pct; and heavy industry machinery revenue decreased by 31.25% to 752 million yuan, with a gross profit margin of 9.56%, with the same decrease in 7.59pct. Equipment business gross profit margin raw material costs generally under pressure, the company through internal fine management, raise sales prices, lock in procurement prices and other ways to stabilize the gross margin level, equipment business profit recovery is expected.
Lithium cycle long slope thick snow, the company's rapid capacity expansion & accelerated channel layout. The lithium cycle has increased by 18% over the past 15 years, and the space of long slope and thick snow is nearly 300 billion in 2035. The production capacity of Jintai Pavilion will be expanded to 50,000 tons of waste ternary batteries in the second half of 2022, and the first phase of the 150000 ton waste lithium iron phosphate battery project is expected to be completed in March 2023. The Longnan Economic Development Zone project will be dominated by waste lithium battery raw materials, forming a ternary precursor project of 30,000 tons per year and battery-grade lithium carbonate of 120,000 tons per year. Rapid expansion of production capacity at the same time actively layout recovery channels, landing cooperation including vehicle enterprises (FAW Group), Internet + e-commerce (JD.com technology), light vehicle lithium faucet (Xingheng Power supply), to ensure the capacity utilization of the project.
Profit forecast and investment rating: we maintain a net profit of 349,558 million yuan in 2022-2023, and it is estimated that the net profit in 2024 is 653 million yuan, corresponding to an EPS of 0.92 yuan 1.47x1.72 yuan in 2022-2024. The current market capitalization corresponds to 7.2x of PE 13.6-2024. Maintain a "buy" rating.
Risk hint: sales of new energy vehicles are not as expected, the progress of the project is not as expected, and competition is intensified.