It is proposed to set up a new materials fund, which is expected to lay out a new generation of power battery new materials and intelligent equipment. 1) Changzhou Lithium, a wholly owned subsidiary of the company, signed a cooperation agreement with Shanghai Liangchuang Capital. The two sides plan to jointly set up a "Benefo Innovation first-generation Power Battery New Materials and Intelligent equipment Equity Investment Fund" to invest in the equity of the industry in line with the company's medium-and long-term development strategic plan. In particular, the underlying equity with the core materials of a new generation of power batteries and high-end intelligent equipment. 2) the size of the new materials fund is 1 billion yuan, and the duration is proposed to be 7 years. The specific organizational form, decision-making mechanism, sources of funds and proportion of investment shall prevail in the partnership agreement. 3) the establishment of an equity investment fund in this overseas investment will help the company expand to a new generation of power battery equipment and materials based on the company's main business of lithium materials and equipment, and obtain new investment opportunities and profit growth points.

Lithium power equipment + integrated intelligent factory, lithium power revenue accounted for 88%, lithium electricity orders increased by 33% year-on-year, the company's layout of new energy business in 2017, to provide lithium materials enterprises with intelligent factory solutions and lithium battery proprietary equipment manufacturing, is currently the only listed company for the whole line supply of lithium materials. In the first half of 2022, newly signed contracts totaled 2.14 billion yuan, of which lithium plate contracts totaled 1.99 billion yuan (accounting for 93%, up 33% from the same period last year).

The investment in the three main materials production lines of lithium electricity will reach 52% in the next three years, and the domestic single-point equipment merchants, chemical industry, industry alliance and materials go to sea to promote the expansion of lithium materials. According to our in-depth report, the investment in the production line of lithium cathode, negative electrode and electrolyte in China is 56.1 billion yuan in 2022, which is expected to reach 198.9 billion yuan in 2025, and CAGR in three years is about 52%. Lithium materials market is mostly single-point equipment manufacturers, companies with the ability to deliver the whole line of manufacturers are very competitive.

Epitaxial mergers and acquisitions promote the self-supply rate of equipment to more than 80%, and strengthen the competition barrier of the whole line supply. at present, the company's self-supply rate of lithium materials and equipment has been raised to 80% from 40% in 2021, and there is room for further improvement. In 2022, the company successively acquired 60% stake in Wuxi Baistone and 40% equity in Suzhou Yunqi Valley to realize the self-supply of negative material kiln outer circulation line and lithium material sintering equipment. The company is actively promoting the acquisition of 60% equity in Suzhou. It is expected to further introduce ceramic roller technology (mainly used in positive material crushing equipment). The improvement of the self-supply rate of the company's equipment will help to strengthen the competitive barriers to the whole line supply of lithium materials and enhance profitability.

Strong endogenous R & D strength, high-quality and stable customer resources, to maintain a leading position in the field of lithium materials and equipment, wholly-owned subsidiary Baili Lithium (formerly Nanda Zijin) has rich experience in equipment and whole-line service in lithium positive / negative / precursor production lines. More than 500 production lines have been built all over the country. With its leading engineering design capability and service concept, the company has been widely recognized by high-quality customers such as Dangsheng Technology, Beitri, Anhui Haichuang, Guoxuan Hi-Tech, New Lithium, BASF Shanshan, Chengdu Bamo, Ningde Times and so on. And continue to open up new customers.

Profit forecast and valuation

It is estimated that the revenue from 2022 to 2024 will be RMB 29.3 million, an increase of 182%, 39%, 28%, respectively, and the net profit will be RMB 0.30 million, an increase of-4%, 948% and 52% respectively over the same period last year, and the corresponding PE will be 200,19,000,000, respectively, maintaining the "Buy" rating.

Risk suggests major shareholder pledge risk; lithium battery market is not as good as expected; acquisition integration is not as expected