EMD leader layout manganese is the whole industry chain, the category is rich to consolidate the leading advantage: the company is the leading enterprise of electrolytic manganese dioxide, according to the data of "China Manganese Industry", the market share reached 28% in 2018, accounting for 35% of the total domestic production capacity and 25% of the world total. The products include mercury-free alkaline manganese type, carbon-zinc battery type, primary lithium-manganese type and high-performance special-purpose EMD. After the expansion into lithium manganate EMD, to achieve the transformation to secondary battery materials. At present, the company has formed the layout of the whole industry chain of manganese ore-lithium manganate EMD: 1) the annual output of manganese ore can reach 200000 tons; 2) Lithium manganate EMD is the core production material of lithium manganate, and the company's production capacity has reached 36000 tons, which is mainly used to produce lithium manganate cathode downstream. Due to the cost advantage of lithium manganate battery, it is expected to be widely used in electric bicycles, low-speed electric vehicles and other fields. It is estimated that electric bicycles will drive the compound growth rate of lithium manganate cathode materials to 85% in the next three years.
From manganese products into the field of lithium cathode, open the market space to embrace new growth opportunities: the company shares in Yuneng New Energy, is an important R & D and production main body of ternary cathode and lithium iron phosphate. Since its establishment in June 2016, Yuneng New Energy has developed rapidly, with operating revenue of 520 million in 2019, an increase of 1.7 times over the same period last year, and the net interest rate of Yuneng New Energy reached 13% in 2019, which is in the forefront of comparable companies. The group company has manganese sulfate-ternary precursor-ternary positive production capacity, the products are being verified by customers, and the vertical integration in the post-subsidy era helps to strengthen cost control; lithium iron phosphate, Yuneng new energy products have entered the Ningde era, BYD supply chain, customers are domestic lithium iron phosphate leading enterprises, and the product quality is at the same level compared with the leading companies in the industry. In addition, the company sells iron phosphate products for the group, which forms good coordination with lithium iron phosphate business.
Investment suggestion: the mainstream technology route of new energy vehicles in the future is still lithium iron phosphate and ternary, and the company's layout in lithium iron phosphate and ternary will help it benefit from the electrification wave. The sound manganese system and environmental protection water main business will also achieve good support for the company's performance. We predict that the EPS of the company in 2020-2022 will be 0.22,0.23,0.27 yuan respectively, corresponding to the PE of 35,33,28 times, covering for the first time and giving recommended rating.
Risk tips: the sales of new energy vehicles are lower than expected, the impact of the epidemic is higher than expected, the price fluctuation of raw materials is higher than expected, the change of technical route is higher than expected, the production capacity is less than expected, and the performance of subsidiaries is lower than expected.
