In July 22, the Chinese acronym of 1986.HK changed its name from "Lottery Chemistry" to "Lottery New Energy", which represents a major change in the company's development strategy. In the first half of the year, the company's battery material intermediate business income reached 250 million yuan, a sharp increase of 972% over the same period last year, accounting for 27% of the total income, a substantial increase of 24 percentage points, making it the second largest business.
We are optimistic about the development of lottery new energy in the field of battery materials, and finally maintain the target price of 2.4 Hong Kong dollars, corresponding to 8.2 times the 22-year forecast price-to-earnings ratio, 71% room to rise from the current price, and maintain the buy rating.
Summary of the report
Affected by the epidemic, the net profit of returning home decreased by 4% in the first half of the year. In the first half of the year, the company achieved 920 million yuan in revenue, an increase of 23% over the same period last year. The net profit was 79.91 million yuan, down 4% from the same period last year. The decline in net profit was due to the prolonged suspension of production and weakening demand among downstream customers of dyes and agrochemical intermediates affected by the epidemic, resulting in a decline in product sales, and product gross profit margin fell to 23%, a drop of 5 percentage points.
The business of battery material intermediates has developed rapidly and its share of income has increased significantly. In the first half of the year, dyestuff and agrochemical intermediates accounted for the largest proportion of the company's revenue, accounting for 51%, revenue reached 470 million, down 17% compared with the same period last year. Pigments and other fine chemical intermediates accounted for the smallest business, accounting for 21%. Revenue reached 200 million, an increase of 27% over the same period last year The proportion of battery material intermediates accounted for 27%, which increased significantly by 24%, making it the second largest business, with revenue reaching 250 million yuan, a sharp increase of 972% over the same period last year. With the rapid development of new energy vehicles and electrochemical energy storage industry, the demand for lithium battery products and upstream lithium battery materials is growing rapidly, which makes the sales price of iron phosphate strongly supported. Lottery New Energy made good progress in customer development in the first half of the year, and maintained close cooperation with Hefei Guoxuan Battery Materials, Changzhou Lithium Source New Energy Technology, Hefei Rongjie Energy Materials, Jiangxi Zhili Technology and other lithium iron phosphate production enterprises.
Continuously increase the production capacity of iron phosphate. As of June, the Caike New Energy plant in Cangzhou, Hebei Province has a production capacity of 30,000 tons of iron phosphate, and the built Dongying plant in Shandong has a production capacity of 50,000 tons. The new capacity will be put into operation in the fourth quarter, and the total production capacity of iron phosphate will reach 80,000 tons by the end of the year. The company's long-term goal is that the production capacity of iron phosphate will reach 150000 tons in 2025, making it a world leader in iron phosphate industry.
Maintain the target price of HK $2.4, buy rating. We are optimistic about the development of lottery new energy in the field of battery materials, and finally maintain the target price of 2.4 Hong Kong dollars, corresponding to 8.2 times the 22-year forecast price-to-earnings ratio, 71% room to rise from the current price, and maintain the buy rating.
Risk hint: industry competition intensifies; epidemic situation intensifies.