Guoyuan Securities-Longyi Technology Co., Ltd. Comments: planned acquisition of Beitre Iron Lithium assets accelerated layout of New Energy

On December 25, the company jointly signed the Framework Agreement on the acquisition of Lithium Iron Phosphate related assets and Business of Beitre New Materials Group Co., Ltd. Longyi Technology intends to acquire the assets and business related to lithium iron phosphate within the scope of the consolidated statements of Betteri through itself or its subsidiaries.

The market share of iron-lithium battery continues to rise, and iron-lithium cathode materials usher in a prosperous stage.

Lithium iron phosphate energy density increases and CTP/ blades and other moduleless technologies are used to drive the warming of iron-lithium batteries in passenger cars. Due to the hot sales of iron-lithium models such as Tesla Model3 iron-lithium version, BYD Han and Hongguang miniEV, the iron-lithium installation rate of passenger cars has increased significantly. The proportion of iron-lithium installed in 2020Q3 passenger cars has reached 12%, an increase of 7 percentage points compared with the previous month, and the overall permeability has reached 32.98%, reaching the level for the whole year of 2019. In addition, iron-lithium batteries are also widely used in commercial vehicles, energy storage, two-wheeled vehicles and other fields, and the market share of iron-lithium batteries will continue to rise, and the corresponding iron-lithium cathode materials will also usher in a stage of rapid development. According to estimates, the demand for iron-lithium cathode materials from 2020 to 2025 is 14x21.5, 29.9 and 41x57 / 780000 tons respectively, with a compound growth rate of 41 per cent.

The proposed acquisition of Beitre iron lithium assets is in line with the strategic layout of the company.

Bertre is a leading manufacturer of lithium iron phosphate cathode materials, with a production capacity of about 30, 000 tons / year, sales of 12000 tons in 2019, a market share of 19%, and the top three in China. In terms of technology, Bertre improved the production process of lithium iron phosphate solid-phase process and performed well in terms of production efficiency, preparation cost, batch stability, magnification performance, etc. The company mainly deals in automotive chemicals, including lubricating oil, urea and coolant, most of which are fuel vehicle products. at present, passenger vehicles are moving towards the electric era, and commercial vehicles show fuel cell routes. the company arranges fuel cell routes in the commercial vehicle market and invests in hydrogen energy tomorrow. Long-term research and development of cathode materials in the field of electric vehicles, and signed a high-performance lithium battery material project in Pengxi Economic Development Zone in October. The planned acquisition of Beitri iron lithium assets will speed up the development of the company's new energy business, the expansion of automotive urea production will be carried out in an orderly manner, and the share will continue to increase the company's automotive urea capacity base mainly in Xishui and Tianjin, with the current Lishui base design capacity of 150000 tons per year (single shift). The Tianjin plant has a designed capacity of 180000 tons per year (single shift) and has been put into production in December. With the arrival of the era of high growth of automotive urea, on the one hand, the company upgraded the Lishui base; on the other hand, it plans to build new automotive urea projects in Pengxi in October, which will continue to increase its share in the future.

Investment advice and profit Forecast

It is estimated that the net profit of homecoming from 2020 to 2022 is 2.1gamma 3.2 / 450 million, an increase of 67%, 49% and 41% respectively over the same period last year, corresponding to an EPS of RMB 0.75 and 1.48, respectively. The company is the automotive urea leader, the brand and channel advantages are obvious, the share is expected to continue to increase, maintain the buying rating.

Risk hint

The promotion of automotive urea is not as expected; product prices are falling too fast; capacity expansion is not up to expectations.