Invisible champion of oxalic acid industry. Fengyuan Co., Ltd. is a leading enterprise in the domestic oxalic acid industry, with industrial oxalic acid production capacity of 85000 tons, refined oxalic acid production capacity of 10, 000 tons, oxalate 5000 tons. Driven by the resumption of rare earth mining overseas, marginal improvement in the pharmaceutical industry and mining of non-rare earths (copper, iron ore, etc.), the volume and price of oxalic acid industry has risen. Prices have continued to rise from a low of 3150 yuan / ton at the beginning of the year to 4150 yuan / ton. In 2019, the net export volume of Q1 reached 27000 tons, + 39% compared with the same period last year. The company fully benefited from the subsequent planning to build 100000 tons of oxalic acid capacity.
Electronic grade oxalic acid has a wide space. Driven by 5G, consumer electronics and automotive electronics, the MLCC industry has ushered in rapid development. Oxalate coprecipitation, as the main method for the preparation of barium titanate (the main material of MLCC basic powder), is expected to stimulate the demand for electronic grade oxalic acid. The company provides Japanese Panasonic with customized high purity electronic oxalic acid for multilayer supercapacitors, downstream mainly includes new energy vehicles and other fields, the application field is huge, the demand for oxalic acid is expected to be 20,000 tons / year; as a major domestic supplier of electronic grade oxalic acid and oxalate, the company benefits from large space of electronic grade oxalic acid.
With the rational distribution of lithium cathode materials, NCM 811 is expected to break through. The company actively develops lithium battery cathode business and has an international R & D team. Under the leadership of Dr. Kim Youcheng, former Chief Technology Officer of GSEM, high nickel ternary NCM811 pilot-scale products have been tested by Korea's well-known lithium battery cathode material testing center, and all the technical indicators have reached the international leading level. The company is actively building a cathode material project with an annual capacity of 15000 tons, of which 3000 tons of lithium iron phosphate phase I and 2000 tons of NCM 523 phase I have been mass produced. The production line construction of lithium iron phosphate phase II, NCM 523 and NCM 811 is advancing rapidly. At present, customers of cathode materials include Penghui Energy, Bic, Youyou Power, Jiatuo New Energy, Voltaitong and other domestic well-known battery companies, and other customers are expected to verify breakthroughs one after another. The company's lithium battery cathode material has a long-term plan of 50,000 tons.
Maintain a "buy" rating. It is estimated that the net profit in 19-21 is 0.78,1.41 and 236 million yuan respectively, and the EPS is 0.81,1.45 and 2.43 yuan respectively. The current stock price corresponds to 27X, 15x and 9x respectively. Considering the huge space of electronic grade oxalic acid and high nickel ternary cathode materials, the company is given 40 times PE, corresponding to the target price of 32.4 yuan, maintaining a "buy" rating.
Risk hint: the risk of falling product prices and the expansion of new projects is not as expected.