Rating:BUY(Initiation)
Target price: RMB31.00
Share price (4 Aug): RMB22.77
Market Cap (RMBm): 58,728.7
Up/downside: 36.1%
We initiate coverage with a BUY call and target price of RMB31. With Gortune and Beiterui in the picture, and market-driven management practices, we expect to see an efficiency lift in Baoan’s operations, while its cathode tech premium andhigher anode capacity continue to drive growth.
New controlling shareholder could raise management efficiency
Baoan, a conglomerate with nearly 200 subsidiaries, had tracked a conservative development path under its SOE identity until recently. Beiterui chairman He Xueqin became its vice president in Aug 2020, and in 2021, Baoan shareholder ShaoguanGaochuang (韶关高创: a wholly owned subsidiary of Gortune Investment) removed clauses that had hindered standard management changes,including those on early dismissal. These had subjected the company to a lump-sum financial compensation equal to more than 10x of annual salary plus benefits. Thus the liberalization paved the way to market-driven management. With Gortune and Beiterui inthe picture, we believe the company’s operations will improve.
Baoan core asset is 68% stake in Beiterui’s lithium battery business
Cathodes: incremental production capacity lifts and quality customer structure
1) Beiterui consistently provided the world's highest anode shipments and its annual production capacity is growing. Effective production capacity was 106000 tons in 2020 and slated to reach 160000/260000 tons in 21/22E.
2) Its customer structure is high-quality and it is the key producer in the overseas supply chain. Major overseas battery factories are its customers: Panasonic, Samsung SDI and LG Chem. Having cooperated with these companies for nearly 10years, we believe Beiterui will continue to lead the supply market.
Cathodes: two new technologies increase efficiency and reduce cost
Efficiency:silicon-based anodes perform well and enjoy a tech premium. Its silicon carbon anodes have been supplied to Samsung SDI since 2013 and silicon oxide anodes to Panasonic and Tesla since 2017. Witha current silicon capacity of 3,000 tons, its tech premium leads to net profit of RMB65000 per ton.
Cost reduction:we believegraphitization technology advances are helping to reduce cost by ~30% vs. traditional processes. Graphitization is a major cost component in man-made cathode production and most of Beiterui’s peers reduce cost by building bases in areas with low electricityprices and improving their furnace installation methods. Beiterui has innovated a continuous graphitization process, but as this is in its early stage of application, we assume it is being used mainly to make low-end anodes. We estimate that with process maturity,its graphitization cost could reduce ~30%.
Anodes: better capacity utilization; mostly-overseas customers lift quantity, profit
It is rolling out incrementalproduction capacity increases more quickly. We expect effective production capacity of 33,000/59,000 tons in 2022/23E. Its high-nickel anodes have been certified by Panasonic and SKI.
Valuation and risks
We expect Baoan’s revenue to arrive at RMB16bn/24.8bn in 2021/22E and net profit of 1.2bn/2bn, up 85%/62%, corresponding to PEs of 48/30x. With a sum-of-the-parts valuation, we assign to Beiterui a PE of 45x and 20x to Mayinglong Pharmaceutical,corresponding to Baoan’s total market value of RMB80bn. We initiate coverage with a BUY call and a target price of RMB31.Risks include: lower-than-expected production capacity roll-outs; cathode prices falling below expectations; weaker-than-expected electric vehicle sales; high-than-expected coke prices; and worse-than-expected company governance changes.Note: our calculations are subjective.
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評級：買入(啟動)
目標價：31.00元人民幣
股價(8月4日)：22.77元人民幣
市值(人民幣)：58728.7
上漲/下跌：36.1%
我們以買入通知和目標價格31元人民幣開始承保。隨着高通和貝特瑞的加入，以及市場驅動的管理實踐，我們預計寶安的運營效率將會提高，同時其陰極技術溢價和更高的陽極容量將繼續推動增長。
新的控股股東可以提高管理效率
寶安是一家擁有近200家子公司的企業集團，直到最近才在其國企身份下走上了一條保守的發展道路。北特瑞董事長何學勤於2020年8月成為副總裁，2021年，寶安股東韶關高創(韶關高創：高調投資的全資子公司)取消了阻礙標準管理層變動的條款，包括提前解僱的條款。這些措施使該公司獲得了相當於年薪10倍以上的一次性經濟補償加上福利。因此，自由化為市場化管理鋪平了道路。有了高通和貝特瑞，我們相信公司的運營會有所改善。
寶安核心資產為北特瑞鋰電池業務68%股權
陰極：增量產能提升和優質客户結構
1)北特瑞始終提供世界上最高的陽極出貨量，其年產能還在不斷增長。2020年有效生產能力為106000噸，計劃在21/22E達到160000/260000噸。
2)客户結構優質，是海外供應鏈的核心生產商。主要的海外電池工廠是其客户：松下(Panasonic)、三星SDI(Samsung SDI)和LG化學(LG Chem)。在與這些公司合作了近10年後，我們相信貝特瑞將繼續引領供應市場。
陰極：兩項提高效率和降低成本的新技術
效率：硅基陽極性能良好，享有技術溢價。其硅碳陽極自2013年以來一直供應給三星SDI，自2017年以來一直供應給松下和特斯拉。目前硅片產能為3000噸，其技術溢價帶來每噸6.5萬元人民幣的淨利潤。
降低成本：我們相信，與傳統工藝相比，電子石墨化技術的進步有助於降低約30%的成本。石墨化是人造陰極生產的主要成本組成部分，貝特瑞的大多數同行都通過在電價較低的地區建設基地和改進爐子安裝方法來降低成本。貝特瑞已經創新了一種連續石墨化工藝，但由於這還處於應用的早期階段，我們認為它主要用於製造低端陽極。我們估計，隨着工藝的成熟，其石墨化成本可以降低約30%。
陽極：更好的產能利用率；主要是海外客户提高數量，利潤
它正在逐步推出產能增長更快的產品。我們預計2022/23年的有效產能為33,000/59,000噸。它的高鎳陽極已經通過了松下和SKI的認證。
估值和風險
We expect Baoan’s revenue to arrive at RMB16bn/24.8bn in 2021/22E and net profit of 1.2bn/2bn, up 85%/62%, corresponding to PEs of 48/30x. With a sum-of-the-parts valuation, we assign to Beiterui a PE of 45x and 20x to Mayinglong Pharmaceutical,corresponding to Baoan’s total market value of RMB80bn. We initiate coverage with a BUY call and a target price of RMB31.Risks include: lower-than-expected production capacity roll-outs; cathode prices falling below expectations; weaker-than-expected electric vehicle sales; high-than-expected coke prices; and worse-than-expected company governance changes.Note: our calculations are subjective.
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此文件僅發給指定收件人或機構。其內容可能包含某種享有法律特權或者需要保密的信息。對於任何未經本公司授權而對本文件所載內容進行使用、披露、分發、變更之行為及由此產生的後果，天風國際證券集團有限公司及其聯屬公司和附屬公司（「天風集團」）概不承擔任何責任。如您並非此文件的指定收件人或機構，請立即通知天風集團，並立即銷燬此文件。謝謝合作。
This message is intended only for the individual or entity to which it is addressed. It may contain legally privileged and/or confidential information. TF InternationalSecurities Group Limited and its affiliates and subsidiaries (「TF Group」) does not accept liability for the unauthorized use, disclosure, distribution and/or alteration of any information it contains or the consequences thereof. If you are not an intendedrecipient, please inform TF Group and destroy this message immediately. Thank you.
