The company maintains a high level of net profit per ton of cathode materials, steadily promotes the release of production capacity, and thickens the profits of new products on the market.
We expect the company to maintain a high level of profitability and benefit from the profit growth brought about by capacity expansion, taking into account the company's profitability beyond its peers, valuing the company at 19 times PE in 2023, corresponding to the target price of 20 yuan, and maintaining the company's "buy" rating.
The company's third-quarter results are in line with expectations and profitability remains high. In the first three quarters of 2022, the company achieved revenue of 12.696 billion yuan, an increase of 179.9% over the same period last year, and a net profit of 1.114 billion yuan, an increase of 128.7% over the same period last year.
Q3 realized a net profit of 356 million yuan, an increase of 105.2% over the same period last year and a decrease of 21.6% from the previous month.
The company expects to build 180,000 tons / year cathode material production capacity in 2023. According to our estimates, 22Q3 shipped about 18000 tons of ternary materials and about 46000 tons in the first three quarters. It is expected that the company will ship 70,000 tons in the whole year. According to the company announcement, the first phase of the 40,000 tons / year cathode material project has been operated at full capacity, with an existing production capacity of 80,000 tons / year. The company expects the second phase of the 40,000 tons / year cathode material project to be put into production by the end of the year, and the 60,000 tons / year lithium iron phosphate project to be put into production in 2023, when we estimate that the annual production capacity of cathode materials will reach 180000 tons.
The company has excellent cost control ability, and the level of net profit per ton of cathode materials is expected to remain high. The company's net profit per ton of 22H1 is about 27000 yuan, and that of 22Q3 is about 20, 000 yuan, which is lower than that of the first half of the year. Through the long Association, the company locked some lithium carbonate raw materials, and the price of lithium carbonate rose 73% during the 22H1 period. During the period of 22Q3, the lithium carbonate price rose 9%, and the cost reduction brought about by the locked raw materials decreased. Considering that the self-financing ratio of the company's precursors is more than 60% and the capacity expansion will increase the economies of scale, we believe that the company's profit per ton of cathode materials is still expected to remain high.
A number of new products are introduced to the market, thickening the company's profitability. The ultra-high nickel products independently developed by the company are highly recognized by downstream customers, and the two ultra-high nickel products have completed customer verification and achieved 100-ton shipments respectively. The platform voltage of the company's new nickel high-voltage products has increased from 4.4v to 4.45v, and the energy density has increased by 2%. The company is building a trial line of sodium battery cathode materials, which will meet the needs of customers of 10,000 tons in the future.
Risk factors: changes in the technical route of the industry; intensified competition in the industry; lower-than-expected demand; substantial fluctuations in the supply and prices of raw materials; and the company's capacity construction is not as expected.
Profit forecast, valuation and rating: the company's net profit per ton of cathode materials maintains a high level, the release of production capacity advances steadily, and the listing of new products increases profits. We expect the company to maintain a high profit level and benefit from the profit growth brought about by capacity expansion, raising the company's 2022-23 net profit forecast to 15.51 / 2.009 billion yuan (the original forecast is 1.947 billion yuan), and the new 2024 net profit forecast is 2.396 billion yuan, corresponding to the 2022-24 EPS forecast value of 0.804 pound 1.24 yuan. At present, comparable companies in the cathode materials industry (Xiamen Tungsten Xinneng, Dangsheng Technology and Zhenhua New Materials) have an average PE valuation of 15 times in 2023 (based on Wind consensus expectations). Considering the company's profitability beyond its peers, it gives the company 19 times PE valuation in 2023, adjusts the company's target price to 20 yuan (the original target price is 35 yuan), and maintains a "buy" rating.