The company is mainly engaged in electrolytic manganese dioxide production. The company is mainly engaged in manganese ore mining and processing; research, development, production and sales of manganese dioxide, electrolytic manganese metal, battery materials and other new energy materials. The company produced 122,000 tons of electrolyzed manganese dioxide per year in 2021. The products were subdivided into special types for carbon-zinc batteries, special types for mercury-free alkali manganese batteries, special types for primary lithium-manganese batteries, cathode materials for lithium manganate batteries, and special types for high-performance batteries.
Electrolytic manganese dioxide is the core material of lithium manganate, and the company has advanced production technology. As an electrode material, lithium manganate has the advantages of low price, high potential, environmental friendliness, and high safety performance. It is expected to be widely used in electric bicycles, low-speed electric vehicles, etc., and the total potential market volume is expected to increase and drive demand for electrolytic manganese dioxide. In terms of electrolytic manganese dioxide production, the company has advanced technology and a mature and stable production process; it has a laboratory and pilot line, and a manganese-based battery materials research institute to provide strong facility support for R&D work.
The company has manganese ore resources, and the raw materials are guaranteed. The company owns the Nanmuchong Manganese Mine and the Aitun Manganese Mine, with sufficient manganese ore reserves. At the same time, the company has established long-term stable cooperative relationships with surrounding manganese mining enterprises and has signed supply agreements. The holding subsidiary Jingxi Electrochemical has signed long-term supply agreements with the Jingxi County Manganese Mine, and the supply of raw materials for production is fully guaranteed.
The company's profit level increased significantly in 2022. According to the company's 2022 performance forecast, the company is expected to achieve net profit of 40—4.7 billion yuan in 2022, an increase of 68.24%-97.68% over the same period last year.
We believe that the increase in the company's profit level is mainly due to the increase in product prices. According to Baichuan Yingfu's data, the domestic price of ordinary manganese dioxide in 2022 was 17118.08 yuan/ton, an increase of 55.73% over the previous year; the average price of lithium manganate market was 13,1732.93 yuan/ton, an increase of 169.33% over the previous year; and the average price of nickel sulfate market was 44383.03 yuan/ton, an increase of 21.35% over the previous year.
Profit forecasts and investment ratings. We expect the company's net profit from 2023 to 2025 to be 421 million yuan, 453 million yuan, and 475 million yuan respectively, while EPS will be 0.67 yuan, 0.72 yuan, and 0.75 yuan respectively. Referring to the valuation level of comparable companies, they were given 22-25 times PE in 2022, with a corresponding reasonable value range of 14.74-16.75 yuan, giving them a “better than the market” investment rating.
Risk warning: product price fluctuations, project construction, rising raw material prices.