◆Deeply involved in the processing of rolled aluminum products, it is the largest enterprise in the domestic aluminum foil market. The company was founded in 2003 in Zhenjiang, Jiangsu. Since its inception, it has been engaged in R&D, production and sales of aluminum sheets and foils. In 2010, the company's new product, new energy power battery foil, was put on the market and listed on the Shanghai Stock Exchange in April 2018. After more than ten years of continuous cultivation, the company has a complete range of aluminum rolling processing products. According to functions and uses, it can be divided into four categories: aluminum foil for packaging, aluminum foil for home appliance printing, aluminum foil for infrastructure, and aluminum foil for new energy materials. From 2019 to 2022, the company ranked first in China in terms of aluminum foil production, sales volume and market share.
◆ Battery aluminum foil processing costs will drop in 2023, and focus on the progress of the industry's production capacity release in 2024-25.
Demand side: 1) Driven by increased sales demand for new energy vehicles, global lithium battery shipments have increased dramatically, driving a rapid increase in demand for battery aluminum foil; 2) Sodium-ion battery cathodes and anodes can use battery aluminum foil, which has doubled compared to lithium battery cathode aluminum foil usage. Supply side: The procurement and installation of new equipment with limited production capacity is long, and the customer certification cycle is long. The full production cycle takes more than 2 years. Some manufacturers have insufficient motivation to switch production. It is expected that supply may be released centrally in 2024-25.
◆ It has customer+technical advantages to extend carbon foil products to increase profits. 1) Customers: The company cooperated with leading domestic and foreign mainstream battery customers, closely followed the global layout of downstream mainstream battery manufacturers, and signed cooperation framework agreements with world-leading battery manufacturers such as Ningde Times and LG New Energy. 2) Technology: Relying on long-term process precipitation, the company independently developed “green manufacturing technology for casting and rolling - cold rolling process”, leading the industry in the number of invention patents related to battery foil; innovative equipment design capabilities improve the freedom and flexibility of production, and can quickly convert battery foil; 3) Carbon foil coating: Highly profitable coated carbon foil has signed supply framework agreements with downstream customers.
Investment advice:
We expect the company's net profit to be 630 million yuan, 917 million yuan, and 994 million yuan respectively, and EPS of 0.71, 1.03, and 1.12 yuan, respectively, and the corresponding P/E is 16.11, 11.05, and 10.21 times, respectively. Considering that the company is gradually being completed and put into operation in Inner Mongolia, and continues to expand downstream overseas battery manufacturers to reach supply agreements, shipments are expected to increase year by year, so the first coverage gave it a “buy” rating.
Risk warning:
The risk that the company's production capacity construction falls short of expectations; the risk of industry overcapacity and increased competition; the risk of price fluctuations and supply of upstream materials; and the risk of deterioration of the overseas business environment.