Main points of investment
Domestic high-end copper foil leader, lithium copper foil capacity utilization remains high, order demand strong company is the domestic high-end copper foil industry leader, benefit from the new energy vehicle industry high demeanor drive, superimposed company capacity gradually release and lithium copper foil business share increase, 2021 company revenue 2.197 billion yuan, an increase of 87.80% year-on-year, home net profit of 381 million yuan, an increase of 207.64% In the first half of 2022, the company's capacity utilization rate reached 121%, copper foil orders were full, and demand was strong, which led to continued growth, with revenue of 1.407 billion yuan, an increase of 46.7% over the same period last year, and net profit of 223 million yuan, an increase of 16.52% over the same period last year.
Global lithium power development contribution increment, new capacity accelerated landing to undertake incremental demand to release profit space (1) demand side: with the outbreak of new energy vehicles and energy storage demand, global shipments of power and energy storage batteries are expected to reach 1612GWh and 397GWh in 2025, driving global demand for lithium copper foil from 360900 tons in 2021 to 1.41615 million tons, and CAGR to 40.75% in 2021-2025. 2) supply side: 2021 company has a production capacity of 24500 tons of lithium copper foil, and it is estimated that the production capacity of 2022 picks will reach 5.55 million tons in 2024, which will fully enjoy the volume dividend of downstream industries.
The iteration of the core technology highlights the cost advantage, and the high-end evolution of the product structure improves the profit space. (1) the yield leads: the company independently controls the core technology that runs through the whole production process, and the yield of lithium copper foil and standard copper foil reaches 83.86% and 89.69%, respectively. the comprehensive yield reached 86.31%, which is in the leading level in the industry, effectively promoting the improvement of unit production efficiency and the reduction of cost. (2) Localization of production line: the newly built production capacity of the company is mainly localized in terms of core equipment such as cathode rollers, achieving an investment of 430 million yuan per 10,000 tons of capacity while meeting the technical specifications of the products, and the investment cost is lower than the average level of the industry. (3) High-end product structure: the company's lithium copper foil accounts for 72.07% of the copper foil business, and the ultra-thin lithium copper foil of 6 μ m and below is the company's main product. High-end route promotes the company's profitability; (4) lightweight trend to create potential growth points: the company's 4.5 micron extremely thin lithium copper foil cost reaches the level of mass production, waiting for downstream demand to promote sustained profit growth. With the establishment of a wholly-owned subsidiary, the advantages of electroplating core technology can be applied to the production of composite copper foil to improve the rate of quality and production efficiency.
In-depth binding of high-quality battery manufacturers, the head customer cooperation continues to deepen the company signed framework procurement contracts with high-quality customers such as Ningde Times, time FAW, Sichuan Times New Energy Technology Co., Ltd., customer orders are saturated, capacity utilization and production and sales rate exceed 120% and 97%, respectively. The lithium copper foil supplied by the company to the Ningde era accounts for 83% of the company's sales. with the strengthening of the head effect of the power battery market and the release of the company's new production capacity, it is expected to boost the supply of enterprises outside the Qinghai era. cooperation between the company and Ningde era is expected to continue to strengthen.
Profit forecast and valuation
The company is a leading copper foil supplier in China, benefiting from the continuous growth of downstream lithium batteries. We estimate that the net profit of homing in 22-24 years is 4.90,7.14 and 1.1 billion yuan respectively, the corresponding EPS is 4.85,7.07,10.89 yuan per share respectively, and the corresponding PE is 14,10 and 6 times respectively. We select lithium copper foil company Nord, Chaohua Technology and Copper Crown Copper foil as comparable companies, with an industry average PE of 20 times in 2023. Taking into account the growth of the company's performance and the margin of safety, we value the company's PE in 2023 at 20 times, corresponding to the current market capitalization of 102.8% of the room to rise for the first time, giving a "buy" rating.
Risk hint
The demand for new energy vehicles is lower than expected, the competition in the industry intensifies, and the price of raw materials fluctuates greatly.
