Main points of investment
Successful transformation of lithium cathode materials, lamps and lanterns heat dissipation business to seek a breakthrough the company's products include electronic products new heat dissipation devices, lithium battery cathode materials, LED lighting and so on.
In 2022, the company plans to invest 5 billion yuan to build lithium cathode and other materials production base, which is expected to create a new growth momentum. In the first three quarters of 2022, the company achieved operating income of 821 million yuan, an increase of 126.68% over the same period last year, and a net profit of 35.2541 million yuan, an increase of 301.04% over the same period last year, mainly due to the rapid development of lithium materials business.
The demand for lithium-ion materials is high, and the recycling market is broad.
Cathode materials are an important part of lithium batteries, which currently account for more than 40% of the cost. thanks to the outbreak of the new energy vehicle market, we predict that the global demand for ternary cathode is expected to reach 1.44 million tons by 2025, and CAGR will reach 38% in four years. In the recycling market, the upstream lithium carbonate is in short supply, but China is short of nickel, cobalt and lithium resources, and the waste battery recycling industry ushered in the development opportunity. According to estimates, the national recovery space for nickel, cobalt, lithium carbonate and iron phosphate is expected to be 4.4,1.0,15.0 and 236000 tons respectively in 2026, and the CAGR for the four years from 2022 to 2026 will be 28%, 12%, 23% and 24%, respectively. Recycled materials will become an important supplement to the market in the future.
Enter into the field of lithium cathode materials, with the whole industry chain technology
In 2021, the company controls Jiujiushenhe, which has the complete industry chain manufacturing technology of "comprehensive recycling of waste lithium-ion battery materials / → precursor / lithium carbonate → cathode materials". In February 2022, the company plans to invest 5 billion yuan in 2022-2025 to build an annual production line for the treatment of 45,000 tons of waste lithium batteries and electrode materials, 60,000 tons of precursors, 20,000 tons of lithium carbonate, 20,000 tons of cathode materials, etc. the first phase will be completed by the end of 2022, and the company estimates that the project will achieve 8.688 billion yuan in income and 625 million yuan in net profit after reaching production.
Seek breakthroughs in traditional business, grasp the trend of letter creation and accelerate expansion
Support policies for Xinchuang industry have been issued all over the country, and many places have made it clear that they want to develop compatibility verification of peripherals and whole machines. The company has accumulated profound knowledge in the field of heat dissipation of electronic equipment, and its products have been extended to the whole machine and its periphery, and has established a comprehensive and in-depth strategic cooperative relationship with relevant governments in the field of information technology application; in terms of 5G mobile phones and base stations, the company will invest in the construction of 60 million ultra-thin heat pipes, 60 million heat soaking plates, 350,000 sets of 5G base station heat dissipation modules and accessories in 2020, and continue to seek breakthroughs in traditional business.
Profit forecast and valuation
Cover for the first time, giving a "buy" rating. The company has successfully entered the field of lithium cathode materials and recycling, and heat dissipation products are expected to benefit from the development of Xinchuang industry. We estimate that the return net profit of the company from 2022 to 2024 is 0.61,2.17 and 380 million yuan, and the corresponding EPS is 0.13,0.47,0.83 yuan per share, respectively. The current stock price corresponds to 69,20,11 times of PE respectively. We select lithium batteries, including Xiongtao shares, Zhenhua New Materials, Enjie shares and Yiwei Lithium Energy, as comparable companies. The average PE of the same industry from 2022 to 2024 is 37, 23 and 17 times respectively. Considering the industry situation and the company's growth, we give the company 23 times PE in 2023, corresponding to a market capitalization of 5.1 billion yuan and a target price of 11.1 yuan, which corresponds to 20% of the current market value. Cover for the first time, giving a "buy" rating.
Risk hint
The industry competition aggravates the risk, the new production capacity is difficult to digest the risk, and the construction progress of lithium and electric materials project is not as expected.