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The company announced on the evening of October 25 that in order to speed up the acquisition and industrial layout of the company's cobalt resources in Congo gold, the company signed a "letter of intent" with FMR Development for matters related to the purchase of three mining rights with mining licenses.
Comments:
The resources of mining rights are found, and the source of raw materials is guaranteed. The counterparty FMR, which is registered in Lubumbashi, Democratic Republic of the Congo, is the owner of three mining rights (with mining licenses and an area of about 30 square kilometers) and has nothing to do with Jubilee Technology. The letter of intent is valid for 2 years, during which the parties conduct exclusive negotiations, and 30% of the transaction amount will be paid on the date of the signing of the final agreement / the day on which the mining license is explicitly handed over for registration. This intention signing has greatly improved the company's potential access to cobalt resources and made great efforts to promote its layout in the cobalt field.
Frequent movements show confidence in rapidly advancing the layout of the cobalt field. In September this year, the company jointly invested 300 million yuan with Jia Jun and Zhang Zhiyi to set up Jubilee Cobalt Industry, which began its journey into lithium metal raw materials. Immediately after October, a "strategic cooperation agreement" was signed with Congo Huaxin to seek cobalt ore supply, which accurately addressed the raw material needs of Jubilee Cobalt industry. at the same time, the signing of long-term cooperation will also provide a strong guarantee for the company to avoid price fluctuations of non-ferrous metals. The discovery of mining rights, less than a month from the company's first announcement, the layout speed is extremely fast, demonstrating the company's determination, confidence and execution of this business.
Cooperative experts, complement each other's advantages and seek common development. Jia Jun and Zhang Zhiyi, partners of Guangdong Yinxi Cobalt Co., Ltd., are senior experts in the field of cobalt metal and experts in the field of automotive metal materials for many years. Huaxin, a strategic partner, has many years of experience in metal cobalt business, as well as cooperation experience with many excellent domestic enterprises, including China Nonferrous Group, in the fields of smelting and mine development. The above professionals and outstanding enterprises are expected to quickly improve the company's technical level and business experience in the cobalt field.
Lay out the lithium battery raw material industry and cultivate new growth points. New energy vehicles have been listed as a national strategy and have been highly valued. Due to the requirement of energy density, the demand for ternary materials (mainly nickel-cobalt lithium manganate) is about to break out. We expect that the signing of the agreement will not have a significant impact on the company's production, operation and performance in the short term, but will effectively promote the company's new energy strategic layout; in the long run, it is expected to greatly improve its profitability and become one of the company's important growth points in the future.
Performance growth rebounded significantly, Xingke re-set sail, the company returned to the upward channel. In the first three quarters of the company, the company's main modified plastics business was booming in both production and sales, and driven by Xingke Electronics into the statement, operating income soared by 75.62%; while the growth rate of all cost items was lower than that of income, reflecting that the company focused on capacity expansion and research and development at the same time, achieved through fine management to control costs and improve profitability. In addition, Xingke and Letv adopted "debt-to-equity swap" for 320 million yuan of accounts receivable debt.
The way has been settled, at present, overseas registration has been completed, and the bad news has been digested. According to the disclosure of the China News, Xingke has successfully transformed from a major customer binding strategy to customer diversification, obtained more and more scattered customers, and reversed losses in the first quarter. The operation is back on track.
Risk factors: 1) the risk of raw material supply and price change of modified plastics; 2) the risk of intensified competition in the product market; 3) the uncertainty of the implementation of mining rights transactions.
Maintain a "buy" rating. We are fully optimistic about the company's rapid layout in the field of lithium metal raw materials, which will promote the development of the company from multiple dimensions, such as performance thickening, upstream infiltration and feedback of downstream traditional modified plastics business. Taking into account the fact that the company's progress in the cobalt field exceeds market expectations and demonstrates its determination, confidence and ability, we raise the company's annual return net profit forecast for 2017-18-19 to RMB 2.04x380pm (originally predicted to be RMB329,000,000), corresponding to EPS forecasts of 0.41, 0.76 and 1.10 respectively (original forecast is 0.41, 0.66 and 0.82) And consider the valuation level of the new energy industry, give 2018 30 times PE, raise the target price to 22.7 yuan, maintain the "buy" rating.
