Successful transformation into the lithium industry, performance growth back to the right track. The company's main business has been successfully cut into the lithium industry from the rare earth luminous materials at the time of listing, and the layout of lithium materials + lithium equipment. As of the first half of 2018, the revenue of lithium materials and lithium equipment business has accounted for more than 90% of the company's total revenue. By cutting into the fast-growing lithium industry, the company's performance is back on track. In 2016-17, the revenue growth rate was more than 100%, and the net profit reached 122 million yuan. Due to the fierce market competition, the gross profit margin of lithium materials business is low. The gross profit margin of the lithium power equipment business is relatively stable, rising from 29.5% in 2017 to 30.1% in 2018H1. 2018H1 lithium equipment business contributed 75.71 million yuan in gross profit, accounting for more than half of the company's gross profit.
The hot market of new energy vehicles has opened a new cycle of lithium battery expansion. Sales of new energy vehicles reached 1.256 million in 2018, an increase of 61.7% over the same period last year. The effective capacity of the lithium battery industry is insufficient, and the leading battery production has been greatly expanded. After combing, Ningde era, BYD, Funeng Technology and other leading battery manufacturers greatly expanded production. Downstream accelerated production expansion will directly drive equipment demand, with the company as the representative of the equipment leader to benefit deeply. According to our estimation, the market space of lithium power equipment from 2019 to 2020 is about 183 or 20.7 billion yuan.
Complete the business layout of lithium power equipment and benefit from the high growth of the lithium power industry. The company has completed the layout of lithium equipment business through the acquisition of three lithium equipment companies. Haoneng Technology, Yuchen Automation and Chengjie Intelligence are respectively engaged in the front, middle and rear equipment of lithium battery production. After the completion of the integration, the company will have the ability to provide the whole line, and its market influence will be greatly improved. Among them, the coating machine equipment of Haoneng Technology and the later equipment of Yuchen have successfully entered the supply chain of Ningde era and are widely recognized by downstream battery manufacturers.
Lithium cathode materials are high-end, and ternary materials will be put into production soon. The company has achieved a breakthrough in research and development of lithium battery cathode materials, and shipments of high-end ternary materials have increased significantly. The production capacity will reach 17000 tons in 2019, and the gross profit margin is expected to increase significantly.
Profit forecast and valuation. It is estimated that the company's net profit from 2018 to 2020 is 0.54,1.14 and 154 million yuan respectively, and the corresponding EPS is 0.25,0.54,0.73 yuan per share respectively. According to the latest closing price of 17.33 yuan, the corresponding PE is 68.1,32.1 and 23.9 times respectively. Taking into account the strong investment willingness of the major customers bound downstream of the company, and the high demeanor of the new energy vehicle industry, the company is expected to maintain high growth in 2019, giving the company an "overweight" rating for the first time.
Risk hints: the macroeconomic downturn leads to the decline in the demand for new energy vehicles, the decline in the subsidy policy for new energy vehicles leads to the decline in demand for new energy vehicles, and the goodwill impairment risk brought by M & An integration.
