JIANGSU GUOTAI INTERNATIONAL(002091)：FIRM‘S 1Q22 RESULTS A SLIGHT BEAT;CAPACITY EXPANSION BOOSTING GROWTH

1Q22 results slightly beating our expectation
Jiangsu Guotai announced 1Q22 results: Revenue was Rmb9.92bn (+58.39% YoY and -25.1% QoQ) and attributable net profit was Rm435mn or Rmb0.27/sh (+161.6% YoY and -9.8% QoQ). The results slightly beat our expectation, mainly driven by rapid growth of the electrolyte business in 1Q22.
The firm’s 2021 revenue and attributable net profit increased 30.71% to Rmb39.39bn and 26.44% YoY to Rmb1.24bn, in line with market expectation. We think the rise was mainly driven rapid growth of electrolyte sector in 2021, and the firm’s increasing sales volume and profit amid tight sector supply and demand balance.
Trends to watch
Spinning off Ruitai New Energy Materials to focus on lithium-ion battery-related business. The firm announced on March 25 that China Securities Regulatory Commission had approved the IPO of Ruitai New Energy Materials (a subsidiary). Data from iccsino.com.cn shows major electrolyte manufacturers’ scheduled production was to grow by 4.4% MoM in April. While COVID-19 conditions may weigh on manufacturing and sales of alternative-fuel vehicles (AFVs), we expect pent-up demand to be released in 2H22, and we remain upbeat on full-year demand for electrolyte. We estimate the price spread between electrolyte and hexafluorophosphate is Rmb42,700/t, up 13.4% compared with the average in 1Q22. The firm’s upstream business integration is limited, but it may benefit from a faster decline in raw material prices. The firm’s production capacity of electrolyte was 71,000t/yr in 2021, and its planned and under-construction capacity is 233,500t/yr. For additives, the firm plans to build a 4,000t/year lithium-ion battery (LiB) and supercapacitor electrolyte new material project. For electrolyte, the firm plans to work with Tonze Electric on a 30,000t/year lithium hexafluorophosphate project. After these projects reach designated capacity, the firm's electrolyte production capacity will likely grow about threefold and we expect sales volume and profit of its electrolyte business to grow in the future.
Textile and apparel trade business rapidly growing; global supply chain strategy to ensure long-term growth. The firm’s main markets for textiles and apparel include the US and EU. Its export growth was healthy growth in 2021, with import and exports up 19.8% YoY to US$5.10bn and export up 19.2% YoY to US$4.37bn as COVID-19 conditions in Southeast Asia led to order transfer to China. In addition, the firm is shifting focus from supply chain integration in China to the integration of global supply chain. It has raised Rmb4.56bn from a convertible bond offering to invest in construction, including a textile production project in Myanmar, so as to improve core competitiveness of this segment.
Financials and valuation
Our 2022 earnings forecast is unchanged, and we introduce our 2023 forecast at Rmb2.05bn. The stock is trading at 8.5x 2022e and 7.2x 2023e P/E. We maintain OUTPERFORM. Given falling average valuations for new-energy material firms, we trim our TP 21.1% to Rmb12.00 (11.1x 2022e and 9.4x 2023e P/E with 30.2% upside).
Risks
Intensifying competition; disappointing AFV sales.
【免责声明】本文仅代表第三方观点，不代表和讯网立场。投资者据此操作，风险请自担。

   【免责声明】本文仅代表第三方观点，不代表和讯网立场。投资者据此操作，风险请自担。