First coverage
Investment highlight
For the first time cover Tianqi shares (002009) to outperform the industry rating, the target price of 18.00 yuan, corresponding to 2023 Pamp E 16.7 times. The company is based on intelligent equipment, cycle equipment, lithium battery cycle, heavy industry equipment four major business service vehicle life cycle, lithium battery cycle is the bright spot of follow-up growth. The reasons are as follows:
Deep ploughing the automotive industry chain, lithium battery cycle business brings new growth points. The company has been ploughing the automotive intelligent equipment industry for 30 years, expanding the heavy industrial machinery and circular equipment industry, and developing steadily as a whole. Since 2017, the company has quickly entered the lithium battery recycling industry through mergers and acquisitions. Jintai Pavilion 1H22, a subsidiary, has annual revenue of 812 million yuan (+ 45% compared with the same period last year) and net profit of 248 million yuan (+ 178% compared with the same period last year). The proportion of lithium battery recycling in revenue has increased to 39%, becoming a new business growth point.
Power battery cycle hundreds of billions of yuan blue ocean market, the core depends on technology and channels. The demand for power batteries continues to support the high demand for battery recycling, and the state has issued policies to guide orderly development. we estimate that the scale of lithium battery positive recycling market is expected to reach 100 billion yuan in 2022. Vehicle factories, battery factories, material factories and third-party enterprises have entered the bureau one after another. On the revenue side, the market supply and demand are booming, the battery recycling channel needs to be dredged in the short term, and the long-term policy guides the construction of the market recycling system. We believe that the channel layout is the core competitive factor of the industry. On the profit side, the lithium recovery process will significantly affect the yield of lithium and the cost of auxiliary materials, which is the core determinant of profitability.
With the accelerated capacity layout and channel layout, the battery recycling business is expected to grow rapidly. The company has the capacity to deal with 50,000 tons of waste batteries per year, and the production capacity and lithium yield are in the forefront of the industry. The company horizontally expands the annual treatment of 50,000 tons of waste lithium iron phosphate battery project, vertically extends the manufacture of ternary precursors and MHP, improves the layout of the whole industry chain of "automobile recycling-battery disassembly-element extraction-material manufacturing" and thickens the profit space. The company has been ploughing deeply in the field of automobile industry chain for many years, and the synergy effect is remarkable. It has cooperated with FAW, JD.com, Xingheng Energy, Haitong Hengxin, etc. We believe that the company is expected to join forces to rapidly build a waste battery recycling channel network and quickly occupy the market.
What is the biggest difference between us and the market? The market is divided over the advantages of the company. We believe that the current market supply and demand is booming, and the channel is the core competitive factor; the company itself is deeply ploughed in the market industry chain before and after the automobile, and is expected to play a synergy effect, join hands in the layout of the channel network, and effectively turn production capacity into performance.
Potential catalysts: lithium battery installed capacity accelerated, ternary materials and lithium iron phosphate prices continued to rise, driving lithium battery cycle demand; policy guidance and market standardization process accelerated.
Profit forecast and valuation
We estimate that the company's EPS and CAGR will be 1.08 yuan and 64%, respectively, in 22max 23 years. The current share price corresponds to 13.0 times the price of 2023. We adopt the SOTP valuation and give the smart equipment / lithium battery cycle / other business 23 times Pmax E on 15-20-5, that is, the target price is 18 yuan, corresponding to 16.7 times Pmax E in 2023, and the target price has 27.8% upside compared with the current stock price.
Risk.
Metal prices fall back; market standardized governance is not as expected; industry competition intensifies.