The net profit of returning home in the first three quarters of 2020 was 60.38 million yuan, + 576.80% compared with the same period last year. The company recently released its three-quarter report for 2020, with operating income of 2.163 billion yuan in the first three quarters,-11.39% year-on-year; net profit of 60.38 million tons, + 576.80%; deduction of non-net profit of 46.18 million yuan, + 397.70%; and net operating cash flow of about 308 million yuan,-42.64% of the same period last year.
2020Q3's operating income is about 985 million yuan, + 28.85% year-on-year, and its net profit is 35.13 million yuan,-31.75% year-on-year, and + 108.36% compared with the previous year. Overall, Q3 performance showed a more obvious recovery month-on-month, but the overall performance of the company may not be as good as expected at the beginning of the year due to the epidemic and other factors.
Ceramic glaze materials have a remarkable leading position, and enter the market of big board and rock plate to open up the growth space. According to the announcement, the company's ceramic glaze material business covers the research and development of ceramic raw materials, ceramic product design, ceramic production technical services, marketing information services and other fields, and is the only full-service chain service provider of ceramic products in China, with a comprehensive gross profit margin of more than 25%. At present, the upgrading tide of large board and rock plate in the building ceramic market has begun, and the company has responded quickly, giving full play to its advantages in realizing high grayscale printing performance, helping downstream ceramic enterprises to achieve production process upgrade. to achieve anhydrous, standardized, intelligent and flexible, it is expected to open up a new growth space in the process of technological upgrading in the industry.
With the steady recovery of the new energy vehicle industry and the rebound of cobalt and copper prices, the company's operating performance is expected to be repaired continuously. The monthly output of new energy vehicles in China continued to hit a record high from July to September 2020, with monthly output of 136100 vehicles, + 52.74% year-on-year and + 28.93% month-on-month. The average price of cobalt in the Yangtze River in the third quarter was 27.35 million yuan / ton, + 5.14% year-on-year and + 8.91% compared with the same period last year. The average price of LME copper in the third quarter was $6516 / ton, + 11.81% year-on-year, and + 20.83% month-on-month. Affected by the recovery of the industry, 2020Q4 is expected to continue to repair: first, the operation of cobalt salt is stable, ternary precursor orders are restored quickly, and capacity utilization is gradually improved; second, the business performance of Congo gold MJM copper products is excellent, with output and profits reaching new highs; and third, led by the new energy vehicle market, the conductive agent business also begins to recover rapidly, and product shipments gradually increase.
At the bottom of the industry, it is proposed to strengthen the new energy vehicle materials business, laying the foundation for the performance to enter a period of rapid growth. On August 21, the company was approved to raise no more than 1.62 billion yuan to build a project of 30,000 tons of ternary precursors, 100tons of high conductivity graphene, 150tons of carbon nanotube conductive agents, 5000 tons of cobalt intermediates and 10,000 tons of copper cathodes, and strive to achieve a production capacity of 100000 tons of ternary precursors and 20,000 tons of metal cobalt salts in the next three years. The company is firmly expanding at the bottom of the industry, and its performance is expected to enter a period of rapid growth. First, affected by the supply contraction such as the suspension of production of Mutanda, the supply and demand of cobalt is obviously tight, and the price of cobalt can be warmed up in the future. Second, the growth trend of overseas markets is strong, and the domestic new energy vehicle industry chain is recovering rapidly. Third, the global development of new energy vehicles is accelerated, and the company has a strong coordination and competitive advantage in the field of key materials of new energy vehicles.
Investment advice: maintain the "buy-A" investment rating, with a 6-month target price of 19.28 yuan. According to the assumption that the average price of cobalt from 2020 to 2022 is 270000 yuan, 300000 yuan and 350,000 yuan per ton, we estimate that the net profit of the company in 2020-2022 will be 1.10,2.96 and 611 million yuan respectively. Considering that the company integrates the head assets of the new energy vehicle industry chain and firmly expands at the bottom, with strong growth, it is given a 6-month target price of 19.28 yuan, which is equivalent to 2021 30xPE.
Risk tips: 1) capacity release is lower than expected; 2) cobalt supply contraction is not as strong as expected; 3) global smartphone production is not as expected; 4) global production of new energy vehicles is not as expected.