Core viewpoints
Industry point of view: the trend of new energy vehicles is clear, ternary and iron lithium batteries coexist. 2020 will be the first year for the global automotive industry to turn to electrification. Based on the planning of mainstream automobile groups in the field of electrification, we maintain an optimistic judgment on the development momentum of the new energy vehicle industry in the next 10 years. Recently, low-cobalt or cobalt-free batteries have aroused extensive discussion. we think that it will take a long time for batteries with new material systems to be mature for commercial application. From the current understanding, the possibility of low cobalt in ternary system is very high. However, a completely cobalt-free battery system is difficult to achieve in the short and medium term. It is expected that in the next five years, the technology path supplemented by ternary iron lithium will still be the mainstream in new energy vehicles. After 3 years of silence, lithium iron phosphate is expected to open the installation situation in the low-end passenger car market, so as to stabilize the installed share.
The company is China's traditional EMD industry leader, has successfully transformed to secondary lithium materials, the main business of new lithium manganate materials (precursors), high-purity manganese sulfate materials and lithium iron phosphate products. With years of accumulation in the field of manganese materials, the company has excellent cost control of lithium manganate and high-purity manganese sulfate products, the annual sales volume of lithium manganate continues to grow at a high speed, and high-purity manganese sulfate has also ushered in a period of production and marketing growth. As an indispensable material for ternary positive electrode, it is estimated that the global demand for dynamic automobile power will be as high as 300000 tons in 2025.
Lithium iron phosphate, a new energy source with high compaction density, is expected to benefit from the installation of lithium iron in passenger cars. The participating company Yuneng New Energy mainly sells lithium iron phosphate cathode materials, in which the high-energy iron-lithium cathode has a compaction density as high as 2.6g/cc, which is the preferred material for the installation of iron-lithium batteries in passenger cars. Superimposed blade batteries or CTP technology can effectively help iron-lithium passenger cars with a range of more than 500km. At present, the company's iron-lithium products have entered the supply chain of Ningde era and BYD, and are expected to benefit from this round of iron-lithium battery recovery.
Financial forecasts and investment suggestions
We predict that the company's earnings per share from 2019 to 2021 will be 0.13,0.25,0.30 yuan respectively, the company has realized the transformation to the secondary lithium battery business, and the related business revenue and profit share are expected to continue to rise. in particular, the participation of the company's new energy lithium iron phosphate products will clearly benefit from this round of iron lithium recovery, and the company is expected to usher in a revaluation. With reference to the comparable company's average valuation of 37 times in 2020, the company's target price in 2020 is 9.25 yuan, giving a "buy" rating for the first time.
Risk hint
The new production capacity fell short of expectations; the price of lithium iron phosphate went down; and the demand for lithium manganate fell short of expectations.