Main points of investment:
Early transformation of the graphene industry, and rapid development. The company has carried out a series of transformational layouts over the past 15 years: 1) buying patented technology in May. Signed "100 tons / year graphene industrial production project technology transfer and patent implementation license and technical service contract"; 2) introduced cooperation from Tsinghua University in July. Signed a framework agreement on graphene applied technology research and development with Tsinghua University to jointly develop graphene batteries and set foot in downstream applications. In the same month, the company acquired a 43% stake in Dongrun Mining Co., Ltd. involved in the production of graphite concentrate; 3) invested 500 million yuan in August to build a project with an annual output of 100 tons of graphene. The Group has a total investment of 500 million, of which listed companies invest 200 million in 100 tons of graphene, and the Group invests 300 million in the construction of lithium iron phosphate project (2000 tons / year). 4) advanced technology. At present, the company already has a technological breakthrough from laboratory to mass production, while domestic graphene is in the breakthrough stage from technological research and development to industrial mass production.
Graphene technology is mature and downstream demand is still to be developed. 1. Leading technology. With the rapid development of graphene research in China, a variety of production technologies have emerged, and their product quality and price are different. Single-layer graphene has the highest quality and the most expensive price. The more layers, the lower the quality and price. The company has obtained the exclusive right in the northeast of the graphene preparation technology patent of Qingdao Golden Ink Automation Technology Co., Ltd., which is relatively mature and can produce 1-3 layers of graphene. Each index is in line with the graphene index published by Professor Andre Heim, the inventor of graphene, and the product has advantages in technology and price. 2. Resource advantage. Heilongjiang, where the company is located, has 64% of the national graphite resources reserves, and most of them are high-grade large flake graphite ore. The main domestic graphene production companies are all layout of Heilongjiang graphite ore. Therefore, the company has a strong resource advantage. 3. The advantage of mass production ahead of time. The graphene project is scheduled for trial production in October 2016, and considering that most of the existing production processes are not up to the 100-ton level, we believe that the company will become the largest graphene supplier after mass production in the future. At present, domestic graphene is in the breakthrough stage of technological research and development to industrial mass production, downstream industrial application, except for the stable demand of ternary lithium battery, the rest of the demand is still to be developed. The company takes the initiative to cooperate with universities to develop downstream applications of graphene, and pays close attention to the development and application of downstream green environmental protection projects, such as supercapacitors and desalination.
Profitability and valuation. Affected by the economic downturn, coke prices continue to fall, the company's main business profit pressure, it is expected that there will be no fundamental improvement in 16-18 years, can only basically achieve a break-even. However, the demand for graphene in 16-17 years is expected to contribute 0.08 yuan and 0.10 yuan to EPS. We predict that the company's EPS in 15,16,17 years is 0.07,0.10 and 0.14 yuan, respectively. With reference to the graphene industry comparable to the company's average PE valuation of 71 times in 2016, and considering the company's comprehensive competitive advantage, the company is given a 16-year valuation of 75 times, with a target price of 7.50 yuan and an "overweight" rating.
Risk hints: there is a great uncertainty in the development of downstream demand; the project production does not meet expectations; graphene capacity may be excess; coal chemical projects are still in investment and construction, and the risk is high.
