Layout of lithium power industry chain, peeling off loss-making assets. The company signed the "Capital increase subscription Agreement" with the local partner in Yichun in June 2022, and CHS invested 1.12 billion yuan with its hybrid power system-related technology ownership and held a 30% stake in Dingsheng Xinliao. After this capital increase, on the one hand, the company stripped off the loss assets of CHS, on the other hand, it successfully cut into the lithium industry and obtained the mining rights of four high-grade underground mines in Yichun. At the same time, the company signed a contract with the local government to invest in industrial projects with an annual production capacity of 30,000 tons of battery-grade lithium carbonate, 60,000 tons of high-power lithium iron phosphate and 3GWh digital core materials. In November 2022, the company once again announced that it would control the above-mentioned lithium mines by purchasing equity, so as to accelerate the layout of the lithium industry.
Innovative expansion of Ni-MH + lithium hybrid energy storage new market, the downstream demand space is broad. Based on the cost advantages and technological advantages of upstream lithium ore, the company actively expands the downstream mixed energy storage market. At the beginning of 2022, the company and its controlling shareholder jointly established Shenzhen Keli Yuanzhi Energy Technology Co., Ltd. In January of the same year, Juzhi Energy Company successfully won the bid for Yingli Intelligence (Baoding) New Energy Technology Co., Ltd. photovoltaic energy storage project, with a total installed capacity of 1390MW. The "Ni-MH + Lithium" hybrid energy storage mode integrates the advantages of high safety, low cost, long life and high energy density of Ni-MH batteries by dispatching and balancing the two ratios, which meets the requirements of the future energy storage market and is expected to be driven by the company's long-term performance growth.
The production capacity of Ni-MH plate has increased rapidly, and equity incentives have been implemented to enhance core competitiveness. The company has ploughed the Ni-MH battery industry chain for more than 20 years, with the layout of the whole industry chain from upstream nickel resources, mid-stream battery materials to downstream Ni-MH battery system. The production capacity of the company's Ni-MH battery business has climbed rapidly in the past three years, with a net profit of 169 million yuan in the first three quarters of 2022, a year-on-year increase of 323.31%. In November 2022, the company issued a draft equity incentive plan to grant 120 million shares to no more than 280people, accounting for 7.22% of the company's total share capital. The performance evaluation index is that the revenue in 2023 is not less than 6 billion yuan, the cumulative revenue in 2023-2024 is not less than 15 billion yuan, and the cumulative revenue in 2023-2025 is not less than 28 billion yuan. The implementation of equity incentive will help to fully stimulate the enthusiasm of employees and promote the rapid growth of the company's performance.
Profit forecast and investment advice: we predict that the company's operating income from 2022 to 2024 will be 60.79max 90.33 million yuan, respectively, and the net profit will be 1.617 billion yuan, corresponding to 0.13max 0.71 pound 0.98 yuan, corresponding to PE77.27/14.35/10.40X. Cover for the first time, giving a "buy" rating.
Risk hints: lithium mining progress is not as expected, price fluctuations, mixed energy storage is not as expected.