The company's 2022H1 realized a net profit of 161 million yuan (+ 107% compared with the same period last year), of which Q2 realized a net profit of 70 million yuan (+ 93% compared with the same period last year). On the basis of intelligent equipment business, around the automotive industry chain, the company has laid out lithium battery recycling, recycling equipment and other businesses. In the lithium battery recycling industry, the subsidiary Jintai Pavilion is the leader in the third-party recycling enterprises. benefiting from the increase in the scrapped scale of power batteries and the shortage of lithium metal, the company's profitability has been greatly improved. at the same time, actively expand the production of ternary and iron lithium recovery capacity, is expected to maintain a leading position. In addition, the company increases the fine management, focuses on the main business, and the management ability continues to improve. Maintain "buy"
Rating.
Matters: on August 15, 2022, the company released its semi-annual report of 2022, with a revenue of 2.075 billion yuan, a year-on-year net profit of 161 million yuan and a year-on-year net profit of + 107%. Our comments are as follows:
2022H1 performance is growing at a high speed. 2022H1 achieved revenue of 2.075 billion yuan, year-on-year + 25%, net profit of 161 million yuan, + 107% year-on-year, deducting non-return net profit of 132 million yuan (+ 104%), basically in line with expectations; from a quarterly point of view, 2022Q2 realized income of 1.132 billion yuan (+ 21%), net profit of 72 million yuan (+ 93%), and non-return net profit of 54 million yuan (+ 93%). The continued growth of 2022H1 performance is mainly due to the rapid growth of lithium battery recycling business.
The profits of the battery recycling business have increased due to the rising price of lithium carbonate. The subsidiary Tianqi Jintai Pavilion achieved an operating income of 820 million yuan and a net profit of 210 million yuan. In the first half of the year, it produced a total of 1451.65 gold tons of metal cobalt, manganese and nickel, with an average recovery rate of 98%. The average recovery rate of lithium carbonate is 986.30 tons, and the average recovery rate of lithium is more than 85%. Profitability and recovery level are in the forefront of the industry. Jintai Pavilion accelerates production expansion: the company estimates that the overall production capacity of lithium battery recycling plate in 2022 will be 7000 gold tons of cobalt manganese nickel and 3000 tons of lithium carbonate, and 12000 gold tons of cobalt manganese nickel and 5000 tons of lithium carbonate in 2023. In addition, the company plans to dispose of 150000 tons of waste lithium iron phosphate batteries per year, of which the first phase of the project (with a treatment scale of 50,000 tons) will be launched in the second quarter of 2022. The main products are lithium carbonate and iron phosphate.
Smart equipment business is growing steadily, with new orders from a number of electric car companies. The company's intelligent equipment business achieved an operating income of 710 million yuan, an increase of 13.55% over the same period last year. By the end of the first half of the year, the company's automotive intelligent equipment business orders 1.096 billion yuan, bulk transport business orders 287 million yuan. In the first half of the year, the new energy vehicle business accounted for 59% of the newly signed orders for the company's automotive intelligent equipment business, an increase of 19% over the same period last year. It won bids for large-scale projects such as Li Auto Inc. (Beijing / Chongqing), Tesla, Inc. (Shanghai), Chang'an Automobile (Nanjing) and BYD. With the expansion of global new energy vehicle capacity, the company will focus on the new energy vehicle market, increase technological innovation, open up overseas markets, and enhance the added value of business, which is expected to benefit from the development of the industry.
The development of circular equipment business is improving, and the business synergy effect is reflected. In the first half of 2022, the operating income of circular equipment was 246 million yuan, up 15.89% from the same period last year, and 314 million yuan was newly signed for circular equipment business in the first half of the year. Hubei Lidi Machine tool, a subsidiary of the company, has successfully developed and sold phosphogypsum comprehensive treatment equipment according to local conditions, combined with the rich phosphate mineral resources in Yichang City and the country's leading phosphorus chemical industry cluster; in addition, in order to meet the business needs of the company's lithium battery recycling plate recycling, R & D and manufacture of waste lithium battery crushing equipment has been successfully put into operation, effectively achieving industrial coordination.
Heavy industry machinery business under external influence, the second half of the year is expected to continue to fine management, reduce costs and increase efficiency. In the first half of 2022, the operating income of heavy industry machinery business was 290 million yuan, down 27.25% from the same period last year. The domestic epidemic situation is repeated and the epidemic prevention measures are strict in various places, resulting in the overall instability of the domestic wind power equipment supply chain. As a result, large foreign wind power manufacturers adjust the production schedule, resulting in insufficient demand for wind power equipment in the first half of the year. During the reporting period, the company signed a new order of 247 million yuan for heavy industry machinery business. We expect that in the future, the company will continue to carry out internal fine management, optimize the process level, reduce the consumption of various production links, and stabilize the gross profit level by raising sales prices and locking purchase prices to maximize benefits.
Risk factors: the risk that the development of new energy vehicles is not as expected, the risk of fluctuation of raw material prices, the risk of intensified competition in the industry, the risk of epidemic situation.
Investment suggestion: on the basis of intelligent equipment business, the company has laid out lithium battery recycling, recycling equipment and other business around the automotive industry chain. In the lithium battery recycling industry, the subsidiary Jintai Pavilion is the leader in the third-party recycling enterprises. benefiting from the increase in the scrapped scale of power batteries and the shortage of lithium metal, the company's profitability has been greatly improved. at the same time, actively expand the production of ternary and iron lithium recovery capacity, is expected to maintain a leading position. In addition, the company increases the fine management, focuses on the main business, and the management ability continues to improve. Taking into account the impact of the epidemic on the company's progress of production expansion, we lowered our net profit forecast for this year to 324 million yuan (the original forecast was 326 million yuan), and maintained our 24-year net profit forecast of 53000,000 yuan in 2023, with a compound net profit growth rate of 40% in 2022-24.
In view of the fact that comparable companies (Hausen, Huahong Technology, Grimme, Huayou Cobalt) unanimously expect an average PE of 17x in 2023, and taking into account the high growth of the company, 20x PE is given in 2023, corresponding to a target market capitalization of 10.6 billion and a target price of 28 yuan, maintaining a "buy" rating.