Matters:

On November 6, the company announced that, based on confidence in the company's future development prospects and recognition of long-term investment value, the controlling shareholder and actual controller Mr. Liu Shiqi and Ms. Li Fei plan to increase their holdings of the company by no less than 8.6067 million yuan and no more than 17.2133 million yuan within the next 12 months. If the above increase is completed, the controlling shareholders and actual controllers will continue to increase their holdings. The amount of additional shares within 12 months will not exceed 43.0333 million yuan. yuan.

Guoxin Telecom's New Views:

1) The actual controller once again increased their holdings, demonstrating firm confidence in the company's long-term development prospects. The controlling shareholder and actual controller have increased their holdings from October 28, 2023 to November 5, 2024, for a total amount of 16.6869 million yuan; this further increase in shares shows the firm confidence of the controlling shareholder and actual controller in the company's development prospects.

2) The company has been deeply involved in the lithium iron phosphate industry for many years and currently ranks in the top three global shipments. The founder of the company founded Wanrun Industry and Trade in 2003 to engage in cathode precursor business such as iron phosphate. Wanrun Xinneng was formally established in 2010. Since its inception, it has focused on cathode businesses such as lithium iron phosphate. Relying on high-performance products, the company has in-depth cooperation with leading global battery companies such as BYD and Ningde Times, and currently ranks among the top three in the global market share.

3) The company actively works with leading customers to help long-term growth with integrated layout and overseas production capacity expansion. Relying on high-performance products and continuous stable supply capacity, the company cooperated deeply with customers such as BYD, Ningde Times, and Hubei Chuneng to achieve rapid sales growth along with customer development. The company has long been deeply involved in high-temperature solid-phase technology, carrying out corresponding production capacity modifications and actively verifying products in response to customer demand for high-pressure solidification products. Fourth-generation products are expected to be supplied in large quantities in 2025, thereby increasing the company's profitability. At the same time, the company is actively implementing an integrated layout. At present, iron phosphate has basically been completely self-supplied, and the Baokang County phosphorus chemical project is progressing smoothly. Furthermore, the company is speeding up overseas expansion, setting up a 0.05 million ton lithium iron phosphate project in the US, and seizing competitive opportunities in the market. It is expected to achieve rapid deployment along with the development of the US NEV and energy storage market.

4) Investment advice: First coverage, giving a “superior to the market” rating. We expect the company to achieve net profit to mother of -0.647/0.404/0.813 billion yuan in 2024-2026, EPS of -5.13/3.21/6.44 yuan, and dynamic PE of -11/17/8 times. Based on absolute valuation and relative valuation, we believe that the reasonable value of the company's stock is between 67.4-70.4 yuan, and there is room for a 25% to 31% premium compared to the company's current stock price.

Risk warning: Competition in the industry increases risks, the risk of large fluctuations in raw materials, the risk of new product verification falling short of expectations, the risk of overseas operations. The risk of holding 5% of the shares will reduce their holdings by 1.9981% of the shares or cause significant fluctuations in the company's stock price in the short term.