Performance review
1H22 performance is in line with our expectations
The company announced 1H22 results: revenue 21.383 billion yuan, year-on-year + 46.2%, month-on-month-13.7%; return to the mother net profit of 931 million yuan, corresponding to 0.57 yuan per share, year-on-year + 151.1%, month-on-month + 7.5%, in line with expectations, mainly due to substantial year-on-year growth in lithium electrolyte sales and steady growth in domestic and foreign trade business.
In the second quarter, the income was 11.46 billion yuan, + 37.1% year-on-year, + 15.5% month-on-month; the net profit returned to the mother was 496 million yuan, corresponding to earnings per share of 0.3 yuan, + 142.5% year-on-year and + 14.2% month-on-month.
Trend of development
Ruitai new materials gem successfully listed, focusing on lithium power business. Looking forward, according to Xin spinulosa information, in August 2022, the production volume of major electrolyte manufacturers was + 16.9%, and the sales potential of new energy vehicles was gradually released under the relief of the epidemic. We are optimistic about the strong demand for electrolyte this year. In terms of profit, according to the announcement, the company sold nearly 39000 tons of battery materials in the first half of the year, and it is estimated that the profit per ton is nearly 12,000 yuan / ton. looking forward, with the price of hexafluorine and other raw materials reaching the bottom, the profit of electrolyte is expected to stabilize gradually. It is optimistic that with the improvement of electrolyte sales, the company's profits continue to grow. In terms of production capacity, the company has 110,000 tons / year production capacity of 1H22 electrolyte, planning and construction capacity of nearly 89.35 million tons / year; in terms of additives, the company plans to build a new annual production capacity of 4000 tons of lithium battery / supercapacitor electrolyte materials and 2100 tons / year lithium materials project; in terms of electrolytes, the company plans to cooperate with Tianji shares in the 30,000 tons / year lithium hexafluorophosphate project. After all the projects reach production, the volume of the company is expected to expand rapidly, and the degree of integration will be effectively improved. We are optimistic that the volume of electrolyte business will increase in the future.
The "World supply chain" strategy ensures long-term growth. The company's important textile and clothing markets include the United States and the European Union. In the first half of 2022, the RCEP agreement officially entered into force, overseas epidemic control was generally relaxed, and the demand for clothing in major foreign markets continued to pick up. 1H22 national textile and clothing exports totaled US $156.49 billion, an increase of 11.7%. During the reporting period, the company's operating income from textiles and clothing was 17.97 billion yuan, an increase of 40.60% over the same period last year. At the same time, the company actively adjusted its strategy, issued convertible bonds to raise 4.56 billion yuan for investment in the construction of Cathay Pacific Myanmar Textile Industry Base project, and continued to lay out the supply base of many "Belt and Road Initiative" key nodes in Myanmar and Vietnam. Continue to promote the company from "China supply chain integration" to "world supply chain integration" change, optimistic about the company's long-term trade business growth.
Profit forecast and valuation
Keep profit forecasts for 2022 and 2023 unchanged. The current share price corresponds to a price-to-earnings ratio of 9.1 times 2023 / 7.7 times 2023. Maintain an outperform industry rating and a list price of 12.00 yuan, corresponding to 11.1 times 2022 price-to-earnings ratio and 9.3 times 2023 price-to-earnings ratio, which has 23.5% upside space compared with the current stock price.
Risk.
Competition intensifies, sales of downstream new energy vehicles fall short of expectations, and project progress falls short of expectations.