The announcement of the company on May 30, 2022 examined and approved the plan to publicly raise 1.45 billion yuan of convertible bonds, which will be mainly used for new production lines and supplementary liquidity. The 1.45 billion yuan raised funds are mainly used for (1) the flat line project of new energy vehicles with an annual output of 40,000 tons; (2) the annual output of 80,000 tons of copper pipe project; (3) the annual output of 70,000 tons of precision copper alloy bar project; and (4) supplementary liquidity.
The new flat line project with an annual production capacity of 40,000 tons of new energy vehicles is expected to be completed in 2026. The project is implemented by Ningbo Jintian New Materials Co., Ltd., a wholly owned subsidiary of the company. the construction site is Ningbo Cixi Economic Development Zone (Hangzhou Bay New area). The construction period is 42 months. The company expects the annual production capacity of the flat line to reach 20,000 tons in 2022, and the 800V flat line project is also in the process of research and development. It is estimated that the production capacity of the flat line will reach 60,000 tons by 2026. Flat line motor and flat line motor have performance advantages compared with round wire motor in new energy vehicles. It is predicted that the global demand for flat line of new energy vehicles will be 225100 tons by 2025, the market scale is 14.182 billion yuan, and the market demand for GAGR=39.02%, is strong from 2021 to 2025. The contribution of flat line business to future performance growth is gradually increasing.
The new project with an annual output of 80,000 tons of small diameter thin-walled high efficiency heat dissipation copper pipe and an annual output of 70,000 tons of precision copper alloy bars is expected to be completed in the second half of 2024. after all the planned production capacity is on the ground, the copper processing capacity will reach 2.39 million tons. These two projects are implemented by Guangdong Jintian New Materials Co., Ltd., a wholly-owned subsidiary of the company. the construction site is located in Dongcheng Street, Sihui City, Zhaoqing City, Guangdong Province, and the construction period is 24 months. In 2022, the company's copper processing capacity is expected to expand to about 2 million tons, and the production capacity of 120000 tons of copper alloy strip is expected to be completed and put into production in 2024. Coupled with the 150000 tons of this investment project, and the release of all completed capacity, it is estimated that the company's copper processing capacity will reach 2.39 million tons by 2025. From 2020 to 2025, the company will continue to expand its copper processing capacity and GAGR=12.27%, will continue to expand production, raising the expectation of future copper processing production and sales.
Investment suggestion: with the production capacity increment and quality improvement of the company, with the new production capacity of copper processing (including flat line) and high-performance NdFeB, without considering the capacity of new investment, the company's 22-24 year revenue is predicted to be 1015.14 yuan, 1080.73 yuan and 111.44 billion yuan respectively, and the return net profit is 9.60 yuan, 11.91 yuan and 1.31 billion yuan respectively. Corresponding to 22-24 PE11.20, 9.02,8.20 times, give the company a "buy" rating.
Risk hint: copper processing output is not as expected; flat wire output is not as expected; competition in NdFeB industry is intensified.