Prebaked anode industry leader, profitability improved year by year. Suotong Development has the largest pre-baked anode production capacity in China and occupies a leading position in the pre-baked anode industry, with a current production capacity of 2.82 million tons. The company's main business is pre-baked anode research and development, production and sales business. The company's operating income increased rapidly, reaching 19.401 billion yuan in 2022, an increase of 105.12% over the same period last year, and a CAGR of 64% in three years. The net profit of returning to the family continued to increase, reaching 905 million yuan in 2022, an increase of 45.99% over the same period last year, and the CAGR reached 119% in three years. In the first half of 2023, the operating income reached 8.13 billion yuan, an increase of 2.09% over the same period last year; the net profit returned to the mother was-409 million yuan, down 171.97% from the same period last year; and the non-return net profit was deducted from-412 million yuan, a decrease of 172.43% over the same period last year.
Pre-baked anode: the downstream demand side picks up steadily, and the company's market share continues to increase. The increase in the production of electrolytic aluminum leads to a rapid increase in the demand for prebaked anodes, but the mismatch between supply and demand between regions is still serious. In this case, the company actively seizes the opportunity of the southward relocation of Northern Aluminum to continue to expand the prebaked anode production capacity in southwest China. The company expects the total anode production capacity to reach about 5 million tons in 2025, and the company's market share is expected to increase rapidly. By optimizing the distribution of upstream raw materials, the company's comprehensive cost advantage has become increasingly significant. The gross profit per ton of pre-baked anode has increased from 407.6 yuan / ton in 2019 to 866.6 yuan / ton in 2022.
Negative electrode: enter the lithium anode industry and accelerate the layout of the second growth curve. The lithium battery industry has a broad development space and a large demand for anode materials. Through the acquisition of Xinyuan shares, the company quickly cut into the lithium negative electrode industry, and then build a "pre-baked anode + lithium negative electrode" carbon material industry based on the integrated green energy supply of landscape and hydrogen storage, creating the company's second growth curve.
The negative production capacity is in the stage of accelerated expansion. Inner Mongolia Xinyuan newly built 40,000 tons graphitization project and Shengyuan negative pole project first phase graphitization capacity 25000 tons into production, 770MW photovoltaic power generation project has been completed, the company expects to turn on power in the second half of 2023. It can be predicted that the vitality of the company's negative material business will be greatly enhanced in the future, and the second growth curve will provide inexhaustible energy for the company's growth and development.
Profit forecast and valuation: we expect the company's revenue from 2023 to 2025 to be 170.97 yuan, 223.11 yuan and 28.205 billion yuan, respectively, an increase of-11.9%, 30.5% and 26.42% over the same period last year. We estimate that the company's EPS in 2023-2025 will be 0.35,1.75,2.57 yuan respectively. According to the comparable company valuation, taking into account the company's intensive production capacity of pre-baked anodes and the synergy brought by the introduction of lithium anodes, we give the company 14 times PE in 2024, corresponding to a reasonable value of 24.50 yuan, with a "better than the market" rating for the first time.
Risk tips: raw material price fluctuations, downstream demand is lower than expected, capacity construction and release is not as expected.