(report producer/analyst: Dongguan Securities Lu Liting Xu Zhengkun)
1.Ferritant Magnetic material leader, "photovoltaic + lithium battery" has become a new highlight of performance growth
.1 Company basic information
The company was founded in 1980, with an output value of over 100 million yuan in 1992. In 1996, it became the first enterprise to pass the ISO9001 quality system certification. The joint-stock company was reorganized and established in March 1999. In 2006, the company issued its shares for the initial public offering and was successfully listed on the Shenzhen Stock Exchange.
In 2009, the company established a solar energy business department to enter the photovoltaic industry. The company's location, Dongyang City, Zhejiang Province, was awarded the title of "China Magnetic Capital" by China Electronic Components Industry Association in January 2011. In 2014, the company was named one of the top 100 electronic components enterprises in the country. In June 2015, the company was selected as the top 50 electronic materials enterprise in China Electronic . The company established a new energy battery business department in January 2016 to enter the lithium battery industry.
Company is mainly engaged in the research, development, production, sales of related products of two major industrial groups: " magnetic materials + devices" and "photovoltaic + lithium battery" and provide one-stop technical solutions. It is an national high-tech enterprise driven by the dual-wheel development of "magnetic materials + new energy".
.2 Introduction to main products
Company has two major industrial sectors: "magnetic material + device" and "photovoltaic + lithium battery". Their main products include magnetic materials, devices, photovoltaic and lithium battery products.
"Magnetic Material + Device".
magnetic material products mainly include pre-sintered materials, permanent magnets, soft magnetic , plastic magnets, etc. Device products mainly include vibrating devices, inductor , circulator/ isolator , etc. "Magnetic Materials + Devices" products are mainly used in the fields of home appliances, automobiles, photovoltaics, consumer electronics, 5G base stations, big data centers, charging piles, smart terminals, industrial Internet, etc.
"Photovoltaic + lithium battery". The company's photovoltaic products mainly include batteries and components, which are mainly used in the construction of ground power plants and distributed power plants; lithium battery products mainly include ternary cylindrical lithium batteries and small power PACK systems, which are mainly used in electric two-wheelers, power tools, portable energy storage, smart small appliances and other fields.
As of June 30, 2022, the company's magnetic materials industry has an annual production capacity of 200,000 tons of ferrite pre-fired materials, 160,000 tons of permanent magnet ferrite , 40,000 tons of soft ferrite , and 20,000 tons of plastic magnetism, and is the largest domestic ferrite magnetic material manufacturer;
photovoltaic industry has an annual production capacity of 8GW batteries and 6GW modules, and the company's component shipments have been firmly ranked first in the European distributed market for many years, and has shaped the leading brand in the black module market;
lithium battery industry has an annual production capacity of 2.5GWh lithium batteries, and with the continuous expansion of production capacity, it will gradually rank among the forefront of the small-power industry segment market.
.3 Financial Analysis
Enters 2022, facing factors such as high global inflation, the Russian-Ukrainian conflict and the ongoing impact of the epidemic, the overall supply and demand of the magnetic material industry are facing downward pressure.
2022H1, by continuously increasing investment in photovoltaic and lithium battery businesses and consolidating the main business of magnetic materials, the company achieved operating income of 9.369 billion yuan, an increase of by 64.63% year-on-year, and a net profit attributable to shareholders of listed companies of 79,700 yuan, a year-on-year increase of 45.96%.
In the first three quarters of 2022, the company achieved operating income of 14.125 billion yuan, a year-on-year increase of 56.81%, and a net profit attributable to shareholders of 1.208 billion yuan, a year-on-year increase of 36.42%; in the third quarter, the company achieved operating income of 4.756 billion yuan, a year-on-year increase of 43.40%, and a net profit attributable to shareholders of 411 million yuan, a year-on-year increase of 21.07%.
From 2018 to 2021, the company's operating income grew steadily, of which in 2021, the company achieved operating income of 12.607 billion yuan, an increase of 55.54% over the same period last year, and the net profit attributable to shareholders of listed companies was 1.12 billion yuan, an increase of 10.54% over the same period last year.
In 2021, the company accelerated its expansion of new energy businesses such as photovoltaics and lithium batteries, and through differentiated operations and raw material cost control measures, the company's operating income and net profit attributable to shareholders have achieved good results.In terms of revenue structure, as a leading old magnetic material enterprise, the company's magnetic material business continues to grow, and its business revenue has grown steadily.
In recent years, with the company's continuous market development and the production of advanced projects such as photovoltaic and lithium batteries, the company's operating income of in the new energy sector of has achieved rapid growth, which has led to a rapid increase in the revenue share of photovoltaic and lithium battery businesses, and the proportion of revenue share of magnetic materials business has gradually narrowed.
2022H1, the company's photovoltaic business contributed the most, reaching 5.862 billion yuan, accounting for 62.57%, the magnetic material business revenue reached 2.144 billion yuan, the lithium battery business revenue was 813 million yuan, and the device business revenue was 375 million yuan; in terms of gross profit composition, the company's photovoltaic business contributed 776 million yuan, accounting for 49.68%, the magnetic material business gross profit reached 501 million yuan, the lithium battery business gross profit was 192 million yuan, and the device business gross profit was 67 million yuan.
According to the third quarter report of 2022, the total revenue in the first three quarters was 14.125 billion yuan, and the photovoltaic business revenue was 8.95 billion yuan, a year-on-year increase of 92%; the magnetic material business revenue was 3.21 billion yuan, a year-on-year increase of 7%; the lithium battery business revenue was 1.125 billion yuan, a year-on-year increase of 106%.
2018 to the first half of 2022, the company's gross and net profit margins showed a downward trend. During the period, the company continued to increase its investment in photovoltaic business and focused mainly on the mid-to-downstream battery and module manufacturing links. The proportion of material costs to revenue is relatively high, and the industry's gross profit margin is relatively low. As the cost of raw materials on the magnetic material side continues to rise, the gross profit margin of the magnetic material business has been reduced.
2022H1 The company's gross profit margin, net profit margin and return on assets (diluted) are 16.67%, 8.5% and 11.46
2. Taking advantage of the new energy trend, the company's photovoltaic business has reached a new level
.1 The global new installation volume has increased significantly, and the green and low-carbon concept drives the development of the industry
According to Bloomberg New Energy Financial Data, the global new photovoltaic installed capacity in 2021 reached 183GW, a year-on-year increase of about 27%, of which China contributed about 54.9GW, accounting for 30%, and the European photovoltaic new capacity reached 25.9GW, accounting for about 27%, accounting for about 27%. 14.23%, it is estimated that by 2025, the global photovoltaic new installed capacity will reach 252GW
The photovoltaic industry has become one of the few industries in my country that have international competitive advantages and realizes end-to-end independent and controllable .
According to statistics from the Photovoltaic Industry Association, in 2021, my country's battery and module production reached 198GW and 182GW respectively, an increase of 46.9% and 46.1% year-on-year respectively.
industry as a whole has achieved rapid growth in manufacturing, application and import and export. From a subdivision, photovoltaic power stations are divided into centralized and distributed power stations. Centralized power stations mainly build large and medium-sized photovoltaic power stations through sufficient solar energy resources and connect to high-voltage transmission systems to achieve long-distance load transmission; distributed power stations are mainly based on the surface of buildings and can better solve the nearby power demand. They have advantages such as small investment and short construction time. They have been widely used in Europe and the United States and are also an important direction for my country to develop green new energy in the future.
company components are mainly distributed, and shipments have been ranked first in the European distributed market for many years.
Distributed photovoltaic power station business model mainly adopts "spontaneous self-use, residual electricity is connected to the grid", which is suitable for home roofs and industrial and commercial roofs. Due to the high utilization rate of distributed photovoltaic resources, its market share has increased rapidly.
Before 2016, due to the rapid development of centralized photovoltaics in developing countries such as China, its development speed was higher than that of distributed photovoltaics, and the proportion of distributed photovoltaics dropped from about 59% in 2012 to 26% in 2016.
Since 2017, with the concept of carbon neutrality in Europe, the United States, Latin America and other countries and regions, the awareness of environmental protection has been rapidly strengthened, and the promotion role of government policy support has been promoted, the application of global distributed photovoltaics has been rapidly promoted, and the proportion of new installed capacity of distributed photovoltaics is increasing year by year.
The development stage of the photovoltaic industry is still in the growth stage. With the advancement of the globalization of carbon neutrality action, the proportion of renewable energy generation in the whole society's electricity consumption will increase year by year.
Based on this, the scale of the photovoltaic industry has been continuously expanded, and the technology upgrade and iteration has been accelerated, which has driven the good growth of the photovoltaic industry. According to the Photovoltaic Industry Association, from 2022 to 2025, the global annual installed capacity of photovoltaics will reach 232-286GW, of which China's new installed capacity will reach 83-99GW. With the accelerated release of upstream production capacity of the photovoltaic industry, product prices are expected to fall, and the penetration rate of photovoltaic products will further increase.
According to IEA statistics, as of December 31, 2021, the global cumulative photovoltaic installed capacity reached 942GW, an increase of 22.8% year-on-year. By the end of March 2022, the global photovoltaic installed capacity exceeded 1,000GW, officially entering the TW (Terawatt) era.
The current price of crystalline silicon photovoltaic modules has dropped from US$1.23/watt in July 2011 to US$0.21/watt. In the medium and long term, with the advancement of large-scale production and technology, the cost of crystalline silicon materials will gradually decrease, and the price of photovoltaic modules will also further decline, promoting the rapid development of the photovoltaic power generation industry, and the global cumulative photovoltaic installed capacity will continue to grow rapidly.
.2 The European energy crisis continues, and the company's photovoltaic product growth opportunities are obvious
As the situation in geopolitical escalates this year, the energy crisis has caused European electricity prices, natural gas prices, etc. to rise. The soaring traditional energy prices have prompted the transformation and upgrading of the European energy structure, and has made a significant move towards an efficient and clean energy system. European countries have adjusted their photovoltaic installation targets.
In July 2021, the EU "Fit for 55" energy and climate package proposals proposed to increase the proportion of renewable energy in 2030 from 32% to 40%; in May 2022, the European Commission announced the REPower EU plan, proposing to increase the overall renewable energy target by 2030 from 40% to 45%.
Figure 15: European natural gas price (USD/million British thermal units) Figure 16: EU photovoltaic cumulative installed capacity
In December 2021, according to the "European Photovoltaic Market Outlook 2021-2025" released by Solar Power Europe, it is estimated that the EU photovoltaic cumulative installed capacity will reach 672GW by 2030, with an average annual new installed capacity of 56.3GW.
In March 2022, the Vice President of the European Commission proposed that "Europe needs to be separated from natural gas as soon as possible to protect citizens from the impact of rising energy prices." Accordingly, the European Photovoltaic Association proposed that it is necessary to pay more attention to solar energy and raise the cumulative EU photovoltaic installed capacity in 2030 to 1TW, with an average annual new installed capacity of 92.8GW, an increase of 65% from the previous 56.3GW.
Global market, according to data from the International Renewable Energy Agency, China firmly ranks first in the photovoltaic installed market, with the global share of photovoltaic installed capacity reaching 36.34%, and Europe ranks second, accounting for 21.77%. Europe is not only the world's second largest photovoltaic installation market, but also the largest module import market. In 2021, European module imports account for 46% of the world's total.
According to PV Infolink data, China's total export of components reached 88.8GW in 2021, an increase of 35.3% year-on-year. Among them, Europe is the largest overseas market for my country's component exports.
In 2021, my country's exports to Europe were 40.9GW, an increase of 54% year-on-year from 26.7GW in the previous year, accounting for 46% of my country's overall share of photovoltaic module exports.
Company mainly focuses on distributed photovoltaic products, and more than 80% of the products are exported to Europe. As the European energy crisis continues to be tense, EU member states attach more importance to the use of photovoltaic energy, creating a good growth space for the company's photovoltaic product business.
Currently, the company's photovoltaic industry has an internal production capacity of 8GW batteries and 6GW modules per year. In the future, the company's photovoltaic industry will continue to invest in advanced production capacity, firmly implement the battery-to-module strategy, take root in the European market, and accelerate the development of the global market.
.3 The company's photovoltaic products accelerate the global layout
The company established a solar energy business department in 2009 to enter the photovoltaic industry. Its main products include batteries and modules, etc., which are used in the construction of ground power plants and distributed power plants.
Company's solar energy business department specializes in the research and development, manufacturing and sales of silicon ingots, silicon wafers, , battery cells, , photovoltaic modules, as well as the system development of various large solar power stations.
Hengdian Dongmagnetic Photovoltaic System Investment and Development Division was established in May 2012, specializing in photovoltaic power station business development investment, consulting design, engineering construction, power generation operation and maintenance and comprehensive services.
has self-made high-efficiency solar modules and has experience in the construction and operation management of large-scale photovoltaic power stations. It is a complete photovoltaic industry chain enterprise in central Zhejiang.
As of June 30, 2022, the company's photovoltaic industry has an internal production capacity of 8GW batteries and 6GW modules per year. The component shipment volume has been firmly ranked first in the European distributed market for many years, and has shaped the leading brand in the black component market. In 2022H1, the company's photovoltaic business achieved revenue of RMB 586,197.62 million, a year-on-year increase of 97.54%. During
, the battery was shipped 2GW and the component was shipped 2.2GW, of which the 166mm+182mm battery capacity accounted for more than 90%. Through continuous market development and the production of advanced projects, the company's solar energy business revenue has achieved rapid growth, driving the company's performance to increase significantly.
2022 In the first three quarters of 2022, the company's photovoltaic business continued to deepen the optimization of product structure, strengthened the leading brand of black components, and increased the proportion of large-size products.
While effectively releasing advanced production capacity of newly invested photovoltaic projects, it continues to promote technological innovation and improve battery conversion efficiency, which has enabled the photovoltaic industry to achieve rapid growth in the first three quarters.
The company's photovoltaic business achieved revenue of 8.95 billion yuan from January to September, a year-on-year increase of 92%. With the effective release of production capacity and the optimization of cost structure, the gross profit of photovoltaic business exceeded 13%, a slight increase from previous years. In terms of shipments of
, the company's components were shipped in the first three quarters and 1.2GW in Q3; the battery sales were about 2.75GW, and the Q3 exports were about 750MW. The company expects that the shipment of photovoltaic products in Q4 will be the same as that in Q3.
The battery module products currently produced by the company have been widely used in commercial, household and industrial off-grid and grid-connected solar power supply systems and solar power plants, and their business covers more than 80 countries and regions around the world.
market side, the company strengthened its output to the European market, and component shipments in the European market accounted for about 80%, achieving more than doubled year-on-year growth; at the same time, it actively explored markets such as Australia, Latin America, Africa, Japan and South Korea, and domestic, and component shipments in some countries increased significantly year-on-year.
With the improvement of brand effect and the acceleration of global layout, the company will deepen and penetrate the European market, and at the same time actively enter Latin America, Japan, South Korea and domestic markets. The company's products' penetration rate of in various markets is expected to grow rapidly.
With its leading product quality and product performance, the company's photovoltaic products have passed many management system certifications , and are the first photovoltaic module manufacturing companies in the world to obtain low-carbon certification.
According to the company, more than 80% of the company's components are shipped to Europe, about 5-6% of the Japanese and Korean markets, about 5-6% of the domestic markets, and the remaining overseas markets shipped include Australia, Latin America, Africa, etc. Among the European markets, France accounts for more than 30%, Central and Northern European countries (Northwest Bilrupo and other countries) accounts for more than 30%, Germany accounts for more than 20%, and other European countries are less than 20%.
.4 Project under construction is progressing smoothly, and the shipment of photovoltaic products is expected to increase rapidly
The company has built three major production bases in Hengdian, Zhejiang, Sihong, Jiangsu, and Qixian, Henan, as well as more than 20 professional factories, and the production capacity is in a steady stage of improvement; the company has an annual production scale of 1.2GW silicon wafers, 10GW batteries, and 6.5GW modules, and the cumulative global shipments have exceeded 26GW.
As of June 30, 2022, the company's photovoltaic industry has an internal production capacity of 8GW batteries and 6GW modules per year. In recent years, the company has continued to increase the research and development and construction of photovoltaic projects. The 4GW high-efficiency battery, 2GW high-efficiency module and other projects completed and put into production by the end of 2021. After a brief climb, all achieved full production in the first quarter of 2022. In July this year, the company's Jiangsu Sihong 2.5GW component project issued an announcement on completion and commissioning, and is now in the stage of mass production climbing.
In 2021, the company's photovoltaic product shipments reached 5.2GW, an increase of about 40.54% over the previous year.
Company targets the shipment of components to reach 4.5GW in 2022 and the battery will be 3-4GW. Currently, 3.4GW components and 2.75GW batteries have been shipped in January-September.The company plans to have a production capacity of 9GW batteries and 7GW modules by the end of this year. As photovoltaic projects in various places reach production one after another and new projects continue to advance, the company's photovoltaic product shipments are expected to increase rapidly. By 2025, it is expected that the capacity of module production is planned to reach 25GW.
.5 Innovation and upgrading continues to advance, maintaining the industry-leading technological advantages
2022H1. The company continues to increase R&D investment and technological innovation efforts, and R&D expenditure reaches 459.6962 million yuan, accounting for 4.91% of the current operating income.
In the first half of the year, the company continued to improve the introduction of new technologies, new materials and new processes from laboratories to commercial mass production, and always maintained the industry-leading technological advantages.
Relying on its excellent quality, Hengdian Dongmaholic Solar Energy was awarded the "top photovoltaic module brand" of EUPD Research and the best performance manufacturer of PVEL global modules. At the same time, the company is also the first company in the world to win the French CRE low-carbon certification, SA8000 certification and Ecovadis Silver Award
photovoltaic industry technology end. The technological development of each link is moving towards large size (182mm, 210mm) and thin filmization.
Currently, the conversion efficiency of PERC batteries is more than 23%, and the market share is more than 90%. Although the market share of N-type products is currently at a low level, with the industry's continuous breakthroughs in N-type technology and the increase in production capacity investment, especially the N-TopCon technology has entered the period of mass production introduction. In the future, the market will show a diversified development situation with P-type single crystal PERC and N-type TopCon batteries as the mainstream, and HJT, IBC and other process technologies as the mainstream.
According to the company, P-IBC technology is very consistent with the current customer group and product application scenarios. Although judging from the current pilot line, there are certain problems, and more time and energy are needed to invest in R&D in the future.
The company's more technology focus is on creating competitive advantages for differentiated products and maintaining technological progress. The product structure is combined with black components + white components to maintain the leading edge of black components, and to make big white components products.
will have the capacity of 9GW batteries and 7GW modules by the end of this year. The company built the TOPCon and P-IBC pilot lines in the first half of 2022 and made preliminary preparations for TOPCon production expansion. It is expected that the project production expansion may be around 5GW, and it is planned to have certain shipments in the third or fourth quarter of 2023.
In the future, the company will further increase its market expansion efforts. On the basis of the completion or full production of existing projects, some new technologies and new products such as TOPCon and P-IBC will be shipped, and strive to maintain the company's leading technological advantages in the photovoltaic industry.
3. Stable and steady, the company's magnetic material industry continues to transform and upgrade
.1 The industry's consumption structure is transformed and upgraded, and China's magnetic material industry continues to grow
my country is the main producer of magnetic materials, with production accounting for more than 60% of the world, followed by Japan, South Korea, India and Vietnam. According to statistics from the Magnetic Materials Industry Association, my country's magnetic materials industry sold about 1.3 million tons of magnetic materials in 2021 (including 800,000 tons of permanent magnet ferrite, 200,000 tons of rare earth permanent magnet, 300,000 tons of soft magnet ferrite, and about 300,000 tons of other magnets), with a total sales volume of 5% year-on-year compared with 2020; the total sales of magnetic materials for the whole year were about 80 billion yuan, an increase of about 7% year-on-year compared with 2020. In 2021, although the magnetic materials industry has maintained a good production and sales situation due to the general rise in raw materials and the COVID-19 epidemic.
From the manufacturing side, in 2022H1 Some listed companies in the magnetic materials industry are increasing their efforts to promote automation, improve production processes and expand new production capacity, and competition within the industry is likely to further intensify.
From the application side, in 2022H1, due to multiple factors such as rising raw material prices, declining residents' willingness to consume, and repeated epidemics, the production and sales of home appliances, mobile phones, fuel vehicles and other products have all declined to varying degrees, affecting the shipment volume of the permanent magnet industry. On the other hand, the market demand for new energy vehicles in , photovoltaic energy storage, data centers, charging piles, etc. is increasing, simultaneously driving the good growth of the soft magnetic industry. Under the combined influence of many positive and reverse factors, we will promote the concentration of production capacity of the magnetic material industry, and at the same time continue to move towards intelligence and greenness.
Outlook In 2022, the price fluctuations of some raw materials in the magnetic material industry will continue. It is expected that some leading companies will make some layouts in terms of raw material self-sufficiency and downstream extension; with the maturity of single-process automation, industrial Internet will further promote in the magnetic material industry. According to the Magnetic Materials Industry Association, global demand for magnetic materials is expected to reach an average annual growth of more than 10% in the next few years.
The development stage of the magnetic material industry is in a period of steady development, but with the increasing demand for magnetic materials and devices in new infrastructure fields such as new energy vehicles, photovoltaics, data centers, and industrial Internet, it will open up new growth space for the magnetic material industry.
.2 Actively explore new application fields, and the revenue of magnetic materials business has grown steadily
The company has focused on the magnetic materials industry for more than 40 years. The magnetic materials business has been under the four departments of magnetic materials headquarters, permanent magnet, soft magnet, and plastic magnet. The company adheres to the development strategy of "making strong magnetism and developing energy" and steadily develops the magnetic materials industry.
In 2021, the company's magnetic material business revenue was 4.269 billion yuan, a year-on-year increase of 26.39%; the sales of magnetic material reached 172,000 tons, a year-on-year increase of 17.28%, and the output reached 175,700 tons, a year-on-year increase of 23.85%.
In the first half of 2022, the company's magnetic materials business achieved revenue of 2.144 billion yuan, a year-on-year increase of 11.38%. In the first three quarters of 2022, the company's magnetic materials business achieved revenue of 3.21 billion yuan, a year-on-year increase of 7%. Although the downstream traditional demand for magnetic materials such as home appliances and consumer electronics has been relatively sluggish since 2022, the gross profit and output of magnetic materials business in the third quarter have slightly decreased. Faced with the lack of efforts in downstream demand, the company actively explores application fields such as new energy vehicles, photovoltaics, and charging piles, so that the magnetic material sector can maintain a steady operating trend in the first three quarters.
Entering 2022, among the four departments of the magnetic material business, the Magnetic Materials Business Headquarters continues to lean production management , increase the layout of pre-sintered material production lines, and ensure the company's core competitiveness of magnetic materials. The Magnetic Material Headquarters has dry and wet permanent magnet ferrite pre-sintered material powder production equipment, with stable product quality, with an annual output of more than 150,000 tons, accounting for more than 70% of the total domestic market share, and has formed the world's largest permanent magnet ferrite pre-sintered material production base. In the face of weak downstream market demand, the permanent magnet department actively deploys new application fields and develops new customers, ensuring a stable development trend. It has an annual production capacity of 55,000 tons of horn magnets, 45,000 tons of magnetic tile, 10,000 tons of squares, 22,000 tons of microwave oven magnets, 1000 tons of dry pressure cutting, 200 tons of bonded magnets, and 50 million sets of motor casings and stators.
soft magnetic department continues to focus on high-end customers, especially in the server, in-vehicle and photovoltaic fields, and has rapidly increased its market share, directly or indirectly supporting many first-tier vehicle manufacturers. At the same time, the market for magnetic powder core, nanocrystal and other products is also developing smoothly, and nanocrystal shipments have achieved ultra-high growth.
plastic magnetic part injection molding magnet has begun to achieve results in the development of high-end market, and the new project has become a new growth point. It currently has the production of more than 15 million pellet materials, more than 80 million magnetic rings, more than 3 million injection molded rotors, more than 2,000 tons of motor magnetic strips for motors, and more than 12,000 tons of rubber magnetic sheets. The annual production scale of
.3 The production capacity continues to expand, and intelligence and greening give new kinetic energy to the magnetic material industry.
As of June 30, 2022, the company's magnetic materials industry has an annual output of 200,000 tons of ferrite prefired materials, 160,000 tons of permanent magnet ferrite, 40,000 tons of soft ferrite, 2 The production capacity of 10,000 tons of plastic magnetism is the largest ferrite magnetic material manufacturer in China. Currently, the first phase of the company's 15,000-ton soft ferrite project is planned to be put into production in late November this year. A production line is already being mass-produced in the first phase of the 22,000-ton permanent ferrite project in Wuzhou, Guangxi.
is a leader in intelligent manufacturing in the magnetic materials industry. After the magnetic materials industry's subsidiary factories became the first factory in the industry to pass the national industrial and industrial integration acceptance inspection, the company's collaborative manufacturing innovative application of the magnetic materials industry in 2021 was included in the 2021 industrial Internet platform innovation and pilot application case by the Ministry of Industry and Information Technology; with the continuous advancement of the intelligentization and digitalization of the magnetic materials industry, the company's magnetic materials sector has achieved a significant increase in revenue.
2022 In the first three quarters, in the face of the continued weak demand in downstream home appliances, consumer electronics and traditional automobiles in magnetic materials, the company has increased its expansion of production of permanent magnets, soft magnets, etc., mainly used in new energy vehicles, photovoltaic inverter , charging piles, servers and other fields.
horizontally, through the development of a full series of products such as permanent magnet, soft magnet, plastic magnet, metal magnetic powder core, rotary magnet, etc., a unique market competitive advantage was built; vertically, through extension to downstream industries, it intervenes in industries such as vibration devices, inductors, and radio frequency devices, breaking through the development bottleneck. In terms of permanent magnets, it mainly includes magnets used in speakers and magnetic tiles in motors. In terms of magnetic tiles, the company is promoting joint investment and factory establishment projects with Japan Fengda Motors; in terms of soft magnets, ferrite, magnetic powder core, nanocrystals, etc. will gradually expand production capacity according to market expansion.
With the addition of new material systems, the company's magnetic material sector is expected to bring new increments.
Through investment in new projects, the company's magnetic materials industry continues to promote the construction of digital, intelligent and environmentally friendly new green factories.
Magnetic Materials Department is implementing the annual production capacity replacement project of 70,000 tons of high-performance ferrite prefixed materials, and has been included in the provincial green manufacturing demonstration project; the permanent magnet department is promoting the molding of burrs and deburrs and automatic swinging blanks, ultrasonic-free cleaning and drying integrated machine, dual-material recycling and automatic feeding system development, etc.; the soft magnetic department is promoting the full process of automation equipment from mixing to inspection and division, etc., so as to further improve production efficiency, improve product quality, and promote the digital development of traditional industries.
4. The downstream demand prospects are broad, and the company's device business is expected to gradually grow
In addition to horizontally developing the full series of magnetic materials products, the company has extended vertically to the downstream industry. Since 2018, it has been involved in the production and sales of device products, and has been involved in industries such as vibration devices, inductors, radio frequency devices, etc. The company's device products mainly include vibration devices, inductors, cyclists/isolators, etc. "Magnetic Materials + Devices" products are mainly used in the fields of home appliances, automobiles, photovoltaics, consumer electronics, 5G base stations, big data centers, charging piles, smart terminals, industrial Internet, etc.
In 2021, the company's device business revenue reached 514 million yuan, accounting for 4.08% of the total revenue, a year-on-year increase of 1.44%. At this stage, the device industry is in a period of steady development. The company continues to expand the application of device products in mobile phones, electronic cigarettes, smart wearables and other fields, which has led to an increase in revenue year by year. The company's main products include vibration devices and inductor devices, and the device industry has an annual production capacity of 400 million vibration motors.
In 2021, the company produced 374 million devices, of which nearly 300 million vibration devices were shipped.
In the first half of 2022, the company's device business achieved revenue of 375 million yuan, a year-on-year increase of 14.57%. According to China Institute of Information and Communications Technology data, China's mobile phone shipments in the first half of the year decreased by 14.5% year-on-year, and the main application areas of vibration devices are the mobile phone market. Although vibration devices are relatively saturated in mobile phone applications, there is a lot of room for growth in non-mobile application areas such as automotive haptic feedback, smart wearable, and health care. The application prospects of inductors in automotive electronics, communications, computers, consumer electronics, small appliances and other fields are becoming increasingly broad.
In terms of industry segmentation, vibration device manufacturers are mainly concentrated in China, Japan and South Korea, with China's production accounting for about 80% of the world. Vibration devices are mainly used in mobile phones and other tactile feedback fields.
According to IDCh data, global smartphone shipments in 2021 were 1.355 billion units, a year-on-year increase of 5.7%. However, in 2022, as the global economy of weakened, inflation and consumer demand weakened, IDC lowered the global smartphone shipment expectation value in 2022 to 1.27 billion units.In addition, the expansion of other industries such as automotive haptic feedback, health care, and electronic cigarettes has also provided new growth space for vibration devices.
inductor device market is mainly dominated by manufacturers in the United States, Japan and Taiwan, followed by China and Europe. Mobile communications is the largest downstream market in the inductor industry, with high unit value for inductors for medical aviation, automotive electronics and industrial use. With the advancement of 5G applications, rapid development of industries such as automotive electronics, and smart cities, the global inductor market has grown steadily. The development trend of the
inductor industry will show characteristics such as miniaturization, high frequency, and high power.
According to the China Electronic Components Industry Association, the global inductor market size will grow by about 7.5% in the next few years. my country is a major consumer of inductor devices. With the rapid change of China's communication technology and the large-scale construction of related industries such as the Internet of Things and smart cities, coupled with the accelerated import and export substitution of some products, it is expected that the growth rate of China's inductor market size will be higher than the global growth rate.
Since the 2022 semi-annual report, the company has included alloy products in the device sector. The products mainly include top hammers, non-standard wear-resistant cemented carbides, high-specific gravity tungsten product vibrators, etc., which are mainly used in artificial diamonds, molds and mechanical wear-resistant parts. In addition to internal mold supply, the company has a high market share in the artificial diamond industry.
In the future, the company will continue to increase investment in device projects, enhance the scale effect of the device industry, accelerate the pace of the inductor market, focus on researching and developing market-competitive products and industries, and improve the company's profitability. It is estimated that by the end of 2022, the company's device industry production capacity will reach 1 billion inductors and 400 million vibrating devices.
5. Lithium battery new energy - focusing on the small power market, the company's market share has increased rapidly
.1 The small power industry is in a high prosperity, and demand in segmented fields has increased significantly
From the manufacturing side, in recent years, the continuous growth of the markets such as lithium batteryization of two-wheelers, portable energy storage, cordless power tools, and popularization of household cleaning robots has driven the prosperity of the small power battery industry.
With the release of new production capacity, competition is becoming fierce.
From the application side, the electric two-wheeler market in the first half of 2022 was greatly increased due to the sharp rise in the price of lithium battery raw materials, which led to the loss of competitive advantages of lithium batteries in the supporting market of electric two-wheeler vehicles. In addition, the implementation of new national standard policies in some domestic regions has slowed down, and most cities have delayed the implementation of 1-2 years, resulting in a slowdown in the replacement of lithium batteries for non-national standard vehicles, making the market penetration rate of lithium battery two-wheeler vehicles less than expected;
energy storage market has entered a large-scale order delivery period due to the backlog of orders in the early stage, and shipments have increased significantly. Although the product prices are still at a relatively high level, the market demand in the energy storage field is still strong, achieving more than doubled year-on-year growth;
power tools have experienced a small wave of destocking, and shipments have slowed down. The cumulative output of domestic portable electric tools reached January-6, 2022 103.101 million units, a year-on-year decrease of 21.1%;
The small household appliance field benefits from the continuous increase in demand for household cleaning appliances represented by vacuum cleaners, driving the shipment of lithium batteries to continue to increase.
Overall, the downstream power battery demand in the lithium sector still occupies a major position. According to data from CITIC Research Institute, the proportion of power battery demand in 2021 will reach 61%, consumer batteries will account for 17%, energy storage batteries will account for 13%, and power tools will account for 6%.
The development stage of the ternary cylindrical lithium battery industry is in a growth stage. With the acceleration of lithium battery penetration of electric two-wheelers, the acceleration of domestic power tools and lithium battery replacement imports, the explosion of portable energy storage markets such as outdoor and emergency backup power supplies, and the rise of smart small home appliance applications such as sweeping robots, the growth space of the ternary cylindrical lithium battery industry is obvious.
combined with the market demand in various application fields, it is expected that the shipment of small power batteries in 2022 can still maintain a good growth trend.
At present, small power battery manufacturers are mainly concentrated in China, Japan and South Korea. With its complete layout of mid-to-upstream industrial chains and excellent manufacturing and cost control capabilities, Chinese enterprises are gradually expanding their market share.
According to EVTank statistics, the global shipment of small lithium batteries in 2021 was 125.1GWh, and China reached 71.81GWh (of which lithium batteries for consumer electronics were about 33GWh), a year-on-year increase of 20.08%, accounting for 57.40%.
According to GGII data statistics and forecasts, China's second-wheeler lithium battery shipments in 2021 were 10.5GWh, a year-on-year increase of about 8.2%. From the application perspective, civilian electric two-wheelers grew by nearly 40%, but the shared market has seen a significant decline in demand due to policy resistance.
The overall two-wheeler market continues to be prosperous, but lithium battery two-wheeler performance is relatively flat. GGII is expected to decline in the penetration rate of lithium battery two-wheeler in the near future due to the sharp rise in the cost price of the core raw material lithium salt and the policy resistance of shared electric motorcycles.
GGII lowered the expected shipment value of China's second-wheeler lithium battery in 2022 from 12.5GWh to 8.2GWh. However, with the promotion of factors such as product technology improvement and environmental protection requirements for green travel, the lithium batteryization of electric two-wheelers is expected to accelerate in the medium and long term. It is expected that China's lithium battery shipments of electric two-wheelers will reach 30GWh by 2026, and there is still a lot of room for improvement in the future. In terms of power tool lithium batteries, since 2021, the high-quality power tool cylindrical batteries of many domestic battery companies have been in short supply. The global shipment of lithium battery for power tool in 2021 was 22GWh, and demand continued to increase in 2022. It is predicted that the shipment scale will increase to 60GWh in the future, which will still have nearly 2.7 times the growth space compared to 2021.
In addition, portable energy storage lithium batteries are an emerging growth track in the lithium battery energy storage market. In 2021, China's portable energy storage lithium batteries shipped will be 1.3GWh, and it is expected that the shipment will reach 8.4GWh by 2026, and the global shipment will be 1.45GWh in 2021, and it is expected to reach 15.2GWh by 2025.
Company plans to achieve a lithium battery production capacity of 7GWh by the end of 2022. The new projects mainly include the annual production of 6GWh high-performance lithium battery projects and high-efficiency integrated inductor projects of the company headquarters. With the continuous release of new production capacity, the company's lithium battery factory has continued to upgrade its intelligence level, and the company's market share in the field of small power batteries is expected to increase rapidly.
company accelerates digital transformation and upgrading in the lithium battery industry, and promotes green, intelligent and efficient. At present, the company has built an upgraded lithium battery factory II, with higher intelligence and production efficiency, and further improved the per capita annual output value. The completion and commissioning of production not only increases the company's capacity scale, but also enhances the company's development potential.
.2 Focus on the field of small power and give full play to its own advantages to vigorously develop
Company established a new energy battery business department in 2015 and started the production and sales of lithium battery products in 2016. As of June 30, 2022, the company's new energy industry has an internal production capacity of 2.5GWh lithium batteries per year. Lithium battery products include ternary cylindrical lithium batteries and small power PACK systems, which are mainly used in electric two-wheelers, power tools, portable energy storage, smart small appliances and other fields.
2022H1, the company's lithium battery business achieved revenue of 813.2357 million yuan, a year-on-year increase of 151.12%, mainly due to the further improvement of the company's product's competitive advantages in the field of small power, coupled with the effective release of the production capacity of 148 million high-performance lithium battery projects annually, resulting in a significant year-on-year increase in production and sales.
2022 In the first half of the year, the company continued to deepen its efforts in small-power segments such as electric two-wheelers, portable energy storage, and power tools. The market competitiveness has been further revealed, and it has established a good reputation in the market. It has successfully developed many new customers. The performance of mass-produced products has been continuously optimized and the research and development of new products has successfully entered the mass trial stage, laying a good foundation for the subsequent 6GWh high-performance lithium battery project to release production capacity.
In the first three quarters of 2022, the company's new energy battery business continued to deeply expand into the small power market, achieving revenue of 1.125 billion, a year-on-year increase of 106%. As the company strategically carried out raw material reserves, combined with improved production efficiency and optimized manufacturing costs, the gross profit of the lithium battery business was about 22%, slightly higher than the same period last year.
In the first three quarters, the company's lithium battery shipments totaled about 140 million units, a year-on-year increase of 57%
6. The report summarizes
Hengdian Dongmachining has been deeply engaged in magnetic materials for more than 40 years, adhering to the development idea of "making stronger magnetism and developing energy". On the one hand, the company has steadily developed its magnetic materials business, and the magnetic materials business continues to transform and upgrade, and horizontally expands various magnetic materials products such as permanent magnets and soft magnets, and extends the device industry vertically. Faced with the weak demand for traditional magnetic materials, the company has increased its application fields for new energy vehicles, photovoltaics, charging piles, servers, etc., and maintained rapid growth in these new application fields, thus ensuring the steady development of the magnetic materials industry.
On the other hand, the company has taken advantage of the new energy trend and relied on its own technological advantages to accelerate its progress towards the "photovoltaic + lithium battery" industry.
In terms of photovoltaics, the company has continuously optimized its product structure, strengthened the leading brand of black components, and increased the proportion of large-size products; while digging deep into the European market, it has actively explored Latin America, Japan, South Korea and domestic markets; continued to promote technological innovation and continuously improved battery conversion efficiency; the effective release of advanced production capacity in the photovoltaic industry's new investments combined with continuous optimization of manufacturing costs, which has enabled the photovoltaic industry to achieve rapid growth. In terms of lithium batteries, the company focuses on the small power market. Although the demand for two-wheeled electric vehicles has declined slightly, the company is expected to maintain a high growth rate by extending to industries such as power tools, portable energy storage and smart home appliances.
With the joint efforts of the two major business segments of magnetic materials and new energy, the company's business structure continues to transform and upgrade, and its future performance is expected to reach a new level. It is estimated that the company's earnings per share will be RMB 1.02 and RMB 1.25 respectively from 2022 to 2023, and the corresponding PE will be 25.22 times and 20.55 times respectively.
7. Risk warning
(1) Macroeconomic fluctuation risk; (2) Exchange rate fluctuation risk; (3) New technology research and development is not as expected; (4) New project progress is not as expected; (5) Global market development of photovoltaic business is not as expected; (6) Risk of weakening downstream demand for small-power lithium batteries; (7) Risk of development of emerging application fields downstream of magnetic materials is not as expected; (8) Risk of slow in inductor product certification cycle; (9) Risk of safety production and environmental protection; (10) The occurrence of force majeure events such as natural disasters and man-made disasters
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Selected report from [Fuanzhan Think Tank]
