Event: the company issued two announcements: (1) the expansion of 100000 tons of ferric phosphate; (2) the relocation of the original industrial oxalic acid base to return to the city and enter the park
Announcement 1: set up a joint venture company to build 100000 tons of iron phosphate in Zaozhuang city. Fengyuan LiNeng, a wholly owned subsidiary of the company, plans to set up a joint venture company Fengyuan Dongjia with Shandong Dongjia Group, in which Fengyuan LiNeng has a 70% stake. The joint venture company will build 100000 tons of iron phosphate in Zaozhuang City. The project is divided into two phases: the first phase is 50,000 tons, which will be put into production within 18 months from the start of construction, and the second phase will be 50,000 tons. Dongjia Group is mainly engaged in titanium dioxide, and ferrous sulfate, a by-product in the production process, is one of the main raw materials of ferric phosphate.
Upward integration extension to help reduce costs & improve the comprehensive performance. The company adopts solid-state process for lithium iron phosphate cathode materials, and the main raw materials are lithium carbonate and iron phosphate. The company expanded production of 100000 tons of iron phosphate to achieve the further layout of the upstream resources, and the integrated layout is gradually clear. We believe that the layout of iron phosphate, on the one hand, can play a synergistic effect at the end of product performance, and the comprehensive performance of lithium iron phosphate cathode can be improved through independent research and production of core precursor materials. On the other hand, it helps to strengthen the stability of the company's supply chain, ease the risk of raw material price fluctuations, and reduce production costs. We estimate that there will be a difference of several thousand yuan / ton between independent production of iron phosphate and purchased iron phosphate at the cost end.
The layout of the resource side is gradually clear. according to the planned production capacity, the self-supply rate of iron phosphate is nearly 100%, and the self-supply rate of lithium carbonate is over 60%. In January, 22, the company announced that it signed a "strategic cooperation agreement" with the Yunnan Yuxi municipal government to invest 200000 tons of lithium cathode materials and related raw material resources in Yuxi. The pilot test line for extracting lithium from clay is expected to be completed by the end of 2022. After the production of the pilot line is completed, the company will build 1000 tons / year lithium salt capacity and 200,000 tons / year iron phosphate capacity. Up to now, the company plans a total of 50,000 tons of ternary cathode, 300000 tons of lithium iron phosphate positive capacity, supporting 300000 tons of iron phosphate, 50,000 tons of lithium salt production capacity. According to the calculation that 10,000 tons of lithium iron phosphate cathode consumes 9800 tons of iron phosphate and 2500 tons of lithium salt, the company's long-term self-supply rate of iron phosphate can basically achieve 100%, and the self-supply rate of lithium salt can reach more than 60%.
Announcement 2: the company's industrial oxalic acid production base will be relocated and retreated to the park. According to the planning requirements of Zaozhuang City, the company's original industrial oxalic acid base will be relocated to Eshan Chemical Park in Yancheng. The original oxalic acid production capacity is 85000 tons, but 75000 tons will be built after relocation. The company will carry out technical transformation and production equipment upgrading of the newly built industrial oxalic acid production line. Therefore, although the production capacity planning is reduced, it is expected that the actual output will rise instead of decreasing. The project will be gradually implemented according to the principle of "build first and then move, build new and demolish the old" and will be completed by the end of 2025.
Mainly due to the requirements of the government's urban construction planning, the relocation to the chemical park has little impact on the operation of the company. The project "build before moving" will not have much impact on the production of the company, and because it is the relocation site caused by the planning requirements of the government, the government will also provide corresponding supporting resources and policy support in the process of construction.
Profit forecast and valuation: from 2022 to 2024, we expect the company to achieve a net profit of RMB 2.69 million, an increase of 407.2%, 154.8% and 36.9%, respectively, compared with the same period last year, and the corresponding PE is 33.8, 13.3, and 9.7 times, respectively, maintaining the "buy" rating.
Risk tips: downstream demand is lower than expected; the company's capacity construction is not as expected; market competition aggravates the risk; raw material price fluctuation risk; new product research and development is not as expected.