Event: the company released its semi-annual report of 2022, with revenue of 916 million yuan in the first half of the year, an increase of 3.47% over the same period last year, a net profit of 305 million yuan, an increase of 507.97%, and a non-net profit of 301 million yuan, an increase of 523.39% over the same period last year.

The performance of the manganese battery material plate has greatly increased, and the sewage treatment business has been operating steadily. 1) Manganese dioxide and lithium manganate benefited from the high price performance: in terms of sales volume, the company's sales volume of 22H1 electrolytic manganese dioxide (including lithium manganate cathode material) was 42500 tons, down 19.05% from the same period last year, and that of spinel lithium manganate was 1200 tons, which basically balanced production and marketing, but affected by the price of lithium carbonate, the production and marketing speed slowed down. In terms of price, the prices of electrolytic manganese dioxide and lithium manganate have increased greatly since 2021. It is estimated that the average tax price of 22H1 electrolytic manganese dioxide is about 157,000 yuan / ton, an increase of about 74% over the same period last year, and the average tax price of spinel lithium manganate is about 110,000 yuan / ton. (the same period last year production capacity was not put into production, reference SMM lithium manganate (power) 22H1 average price of 126,000 yuan / ton, up 209%). Despite the slowdown in production and sales, benefiting from the sharp rise in average prices, the gross profit margins of manganese dioxide and lithium manganate cathode materials were + 15.41pct/+25.28pct to 36.82% and 44.00%, respectively, and spinel lithium manganate was as high as 42.93%. 2) the scale of sewage treatment business and profit margin are basically stable: the company has Xiangtan sewage treatment franchise, profits and cash flow are relatively stable, 22H1 achieved revenue of 61 million yuan, gross profit of 31 million yuan, gross profit decreased to 50.63% 7.66pct compared with the same period last year.

The demand for manganese in battery materials may increase rapidly, and manganese battery materials are expected to continue to benefit. 1) the application of manganese in the battery field is expected to see explosive growth: lithium manganate battery has the advantages of low price, high potential and good safety performance, and its permeability may continue to increase in areas such as small power and power tools. The theoretical energy density of lithium ferromanganese phosphate is about 20% higher than that of lithium iron phosphate, and can be used alone or mixed with ternary materials. there are many mainstream enterprises in the battery industry chain, which are on the eve of industrialization, and some enterprises have taken the lead in the field of small power. Most of the existing technical routes of sodium ion batteries use manganese-containing cathode materials. For example, the manganese content of layered oxide cathode materials patented in Ningde era is 28%. In the future, with the industrialization of sodium ion batteries and rapid demand in areas such as energy storage, the application of manganese in the battery field will be further expanded. Lithium manganate, lithium ferromanganese phosphate, sodium ion battery and other battery technology routes are about to release rapidly, while manganese resources are relatively abundant, manganese dioxide and other manganese series raw materials are expected to fully enjoy the high boom.

Profit forecast and investment advice: taking into account the rapid growth of manganese demand in the battery sector, it is estimated that the net profit of 2022max 2023max 2024 will be 6.5pm 83pm, giving it a "overweight" rating for the first time.

Risk tips: downstream demand is lower than expected, product prices fluctuate, and projects under construction are not as expected.