Investment event

In the first half of 2022, the company achieved operating income of 426 million yuan, an increase of 9.22% over the same period last year, and its net profit was 23.72 million yuan, down 40.46% from the same period last year. In the second quarter of 2022, the company achieved revenue of 270 million yuan, an increase of 20.20 percent over the same period last year and 73.04 percent month-on-month growth. The net profit returned to its mother was 12.23 million yuan, down 51.13 percent from the same period last year and 6.35 percent higher than the previous year. The change in corporate performance is mainly due to the impact of the traditional main business: (1) the sharp rise in raw material prices and the unsmooth downward transmission of costs; (2) under the influence of the epidemic and industry cycle, demand is depressed, and competition intensifies, leading to a decline in gross profit margin.

Hand in hand with Bertre to actively transform the negative gold track, the negative production capacity will be released and thickened in an orderly manner, and the company will jointly build negative capacity with a shareholding of 49%. The first phase of Ya'an is expected to be put into production in August 22. 50,000 tons of the second phase will be planned after the first phase is completed. The first and second phase of the production line does not include graphitization process, Tianquanfu saddle to achieve a furnace capacity of 356,890pm 1252 million tons, combined with on-hand orders can provide Sichuan Rui an-/ 434 / 50000 tons, Tianquanfu saddle's planned graphitization capacity of 110000 tons can fully guarantee graphitization supply, and negative electrode business is expected to contribute to thickening this year's performance.

The expansion outside the province is progressing smoothly. It is expected that the environmental governance business will maintain steady growth. In the first half of 2022, the revenue of the environmental governance business was 224 million yuan, an increase of 4.66% over the same period last year, with a gross profit margin of 34.70%, a slight decrease of 1.81% over the same period last year. The profitability of stable income growth remained stable; from a regional point of view, revenue in Northeast and North China decreased by 14.94% and 6.73% compared with the same period last year. However, income in East China, Southwest China, South China and Central China increased by 154.76%, 393.43%, 1403.02% and 100% respectively compared with the same period last year. The expansion of the company's environmental governance outside the province is progressing smoothly and is expected to maintain steady growth in the future.

Downward demand-under profit and pressure from rising raw materials, steel casting business is expected to achieve 188 million yuan in revenue in the first half of the year, an increase of 13.86% over the same period last year, and a gross profit margin of-5.93%, a decrease of 10.86% over the same period last year. most of the shipments of steel castings in the first half of the year were signed orders in 2021, prices have been locked, prices of bulk raw materials continue to rise, costs per ton continue to rise, profits are under pressure. In the fourth quarter of 2021, the company negotiated with the downstream to improve the product structure. The current scrap price index has been adjusted back from the May high of 3400 yuan / ton to around 2700 yuan / ton. It is expected that the future will be accompanied by the completion of the downstream negotiation & the reduction of raw material costs. Steel casting business profits ushered in repair.

Profit forecast and valuation

The company is a diversified enterprise actively transforming the new energy track, and the negative material opens the second growth curve. Taking into account the consolidated statement and supporting financing, we maintain the forecast of the company's return net profit for 22-24 years at 6.09,10.55 and 1.313 billion yuan. Based on the total share capital of 448 million shares after the fixed increase in mergers and acquisitions, the total market capitalization of the stock price on August 23 is 11.072 billion yuan, and the PE corresponding to 22-24 is 18, 11, 8 times respectively, maintaining the "buy" rating.

Risk hint

Global new energy car sales are lower than expected; negative and graphitized capacity construction is not as expected; competition in the negative industry is intensified; and the risk that refinancing progress is lower than expected.