(report producer/ analyst : China Post Securities Li Shuaihua Zhang Yatong)
1. The purpose is to build a world-class new material enterprise
.1 magnetic material and testing business two-way drive
The company is mainly engaged in the research and development, production, sales and inspection and testing services of magnetic materials. It has a relatively complete magnetic material industry chain and is committed to building a comprehensive supplier of magnetic materials. The inspection and testing service business mainly focuses on large infrastructure fields such as railways and highways and also serves the company's new materials fields such as magnetic materials.
The predecessor of the company, "Anhui Tianyuan Technology Co., Ltd.", was established in 2002 and continues to expand its magnetic materials business. From 2002 to 2005, it successively acquired 80% of the equity of KL Magnetic Materials Co., Ltd.; built an annual production line of 300 tons of neodymium iron boron ; and established Tongling Manganese Industry Branch.
A-share listing has opened a new era for the company, and the magnetic material business has taken a step forward. In August 2006, the company (002057) was listed on on Shenzhen Stock Exchange, raising 140 million yuan to build a coarse-grain permanent magnet roller-type strong magnetic separator, an annual output of 3,000 tons of high-performance permanent magnet ferrite tile magnets, and a 10,000 tons of high-purity and high specific surface area low-manganese tetroxide project; in April 2010, it invested in the establishment of Kebo CNC Co., Ltd., holding 95.24% of the shares, and in December acquired 20% of the shares of KL Magnetic Materials at a transaction price of 1.25 million yuan. So far, the company holds 100% of the shares of KL Magnetic Materials; in August 2013, it participated in Tongling Nayuan Materials, accounting for 30% of the shares of ; in December 2015, its subsidiary Nanjing Magnetic Materials Plant plans to build an annual output of 20,000 tons of lithium batteries and a soft magnetic high-purity trimanganese tetroxide project.
integrates and injects new materials business to enhance the company's competitiveness. In 2017, China Steel Group integrated and injected its new materials business into the listed company. After the reorganization is completed, the company added the development and deep processing business of metal products, metal testing and manganese products; in January 2019, it acquired Guizhou Jinrui, holding 26.5% of the shares; in 2020, it successfully acquired Jinning Sanhuan and increased its shares to 51%, adding soft magnetic material products; in March 2021, it raised about 929 million yuan for the construction of 15,000 tons of high-performance soft magnet ferrite materials and devices per year; in October 2022, the company plans to acquire 92.3198% of the shares of Shanghai New Graphite Materials Co., Ltd. and 7.6802% of the shares of Shanghai Carbon with its own funds of 20.2696 million yuan.
expands through product production capacity , thereby achieving the overall level of the industry "world-class". As a central enterprise holding listed company with its main business of magnetic materials, metal products and inspection and testing, Company is based on its own actual situation and development advantages, and comprehensively makes strategic planning and industrial layout to achieve the goal of high-quality development of in the "14th Five-Year Plan" .
By 2025, three industrial clusters of more than 1 billion yuan will be built, namely permanent magnet ferrite business, rare earth permanent magnet business, and soft magnet business. Among them, the production capacity of permanent magnet ferrite devices is planned to reach 40,000 tons, the production capacity of rare earth permanent magnet devices is planned to reach 10,000 tons, and the production capacity of soft magnet ferrite devices is planned to reach 20,000 tons. Create 3-5 stealth champion products, among which, electronic-grade trimanium tetraoxide and battery-grade trimanium tetraoxide plan to add 10,000 tons of production capacity on the original basis, with a total production capacity of 75,000 tons.
By the end of the 14th Five-Year Plan period, the production capacity of metal products will expand from 70,000 tons to 100,000 tons. is world-class, focusing on the development of high-strength, high-strength special steel wire, complex section special steel wire and special alloy steel wire, to create 2-3 hidden champion products.
.2 Backed by state-owned enterprises, deepening reforms
6 The actual controller of the company is State-Associate Commission of the State Council , and the controlling shareholder is China Steel Capital. As of September 30, 2022, the company's top five state-owned legal shareholders were China Steel Capital Holdings Co., Ltd., China Steel Group Zhengzhou Metal Products Engineering Technology Co., Ltd., China Steel Group Ma'anshan Mining Research Institute Co., Ltd., and China Metallurgical Science and Technology Achievements Transformation Co., Ltd., respectively. The shareholding ratios of the above four are 16.25%, 7.16%, 4.89%, and 2.05%, respectively. The State-owned Assets Supervision and Administration Commission of the State Council indirectly holds shares in China Steel Group Corporation, holding a total of 30.94% of the company's equity, which is the final controller.The subsidiaries of
are clear in business and are respectively laid out in different tracks.
The company is engaged in various businesses are carried out by different subsidiaries, and while expanding its main business, it also lays out new tracks. Among them, , Zhongsteel Products Institute, is mainly engaged in the research and development of new technologies and new processes for various products of steel wire and wire ropes. The Products Research Institute has China Steel National Inspection, which is the first batch of state-owned third-party inspection agencies approved for establishment in the country. The inspection scope covers metal products, engineering raw materials and other products; the magnetic material business mainly relies on internal secondary unit magnetic material factories, neodymium iron boron factories, and other subsidiaries such as Tongli Magnetic Materials, Jinning Sanhuan, Xinkangda, Hunan Special Materials, etc.; the equipment manufacturing business relies on Zhongwei Company and Tianyuan Intelligent; in addition, the company has deployed iron phosphate through Tongling Nayuan, and at the same time, it cooperates with the advantages of manganese-based materials to quickly enter the field of new lithium battery materials.
The company has established and improved incentive and constraint mechanisms to stimulate employees' enthusiasm.
On March 16, 2022, the company issued the first restricted stock incentive plan announcement, with a plan to grant 12.86 million shares, accounting for approximately 1.723% of the company's total share capital, and the grant price is 4.15 yuan per share.
The total number of incentive targets granted by this plan for the first time is 143, including directors, senior management personnel in the company when the company announced this plan, and core technology (business) backbones of the company (including branches and subsidiaries).
The implementation of this incentive will help further improve the corporate governance structure, form a good and balanced value distribution system, and encourage the company's directors, senior management personnel, core technology and business personnel to pay attention to the long-term development of the company, ensure the steady improvement of the company's performance, and ensure the realization of the company's strategic development plan and business goals.
.3 The performance hits a new high, and the future is expected to be expected to be the company's operating income hit a new high and its profits have risen sharply. In 2021 and January-September 2022, the company achieved revenue of 2.588 billion yuan and 2.081 billion yuan, respectively, increased by 254.76% and 14.30% year-on-year; net profit attributable to shareholders was 214 million yuan and 280 million yuan, respectively, 23.56% and 81.38% year-on-year; net profit attributable to shareholders was 173 million yuan and 233 million yuan, respectively, year-on-year, respectively. The significant increase in profits is mainly due to the continued expansion of the company's testing business and the significant increase in the profitability of trimanganese tetraoxide products; at the same time, the performance of the equity-holding company has grown rapidly, which has greatly increased investment returns.
2022 Q3, the company achieved revenue of 654 million yuan, a year-on-year decrease of 3.65% and a month-on-month decrease of 11.14%; net profit attributable to shareholders was 82 million yuan, a year-on-year increase of 64.47% and a month-on-month decrease of 39.7%; net profit attributable to shareholders was 69 million yuan, a year-on-year increase of 62.12% and a month-on-month decrease of 42.0%.
Industrial raw materials, electronic components, testing business and metal products contribute to the main operating income.
Industrial raw materials represented by trimanganese tetraoxide are the company's largest source of revenue, contributing 507 million yuan in the first half of 2022, accounting for 35.5%; electronic component products, including permanent magnet ferrite devices and rare earth permanent magnet devices, contributed 336 million yuan, accounting for 23.5%, and magnetic materials contributed a total revenue of nearly 60%; metal products contributed 246 million yuan, accounting for 17.2%; metal products contributed 206 million yuan, accounting for 14.4%.
Company's testing business has gradually expanded and has become the main source of gross profit contribution.
points business, in 2021, the company's metal product testing, metal products, industrial raw materials, electronic components, and gross profit was RMB 223 million, RMB 121 million, RMB 101 million and RMB 97 million, respectively; among which the gross profit of metal product testing is stable at about 50%, and the gross profit of electronic components and industrial raw materials in magnetic materials has decreased year by year. As of 2021, electronic components and industrial raw materials account for 16.87 and 10.82% respectively. In terms of gross profit margin, the gross profit margins of industrial revenue, electronic components, metal product testing and metal products in 2021 were 10.82%, 16.87%, 49.52%, and 27.79%, respectively, which has declined slightly in recent years, but overall remained stable. During the period, the expense rate continued to decline, and the company's cost reduction and efficiency improvement achieved remarkable results.
The company's three-fee expenses in 2021 were 199 million yuan, an increase of 54.26% year-on-year, and the three-fee expenses were 7.69%, a decrease of 0.38% year-on-year, of which sales expenses were 52.86 million yuan, and increased by 173.40% year-on-year, mainly due to the increase in the company's revenue; administrative expenses were 136 million yuan, an increase of 41.36% year-on-year, mainly due to the increase in the company's merger scope, as well as the increase in wages, salary, depreciation expenses, etc.; financial expenses were 9.7 million yuan, a decrease of 26.68% year-on-year. From January to September 2022, the total cost of the three-fee was 149 million yuan, a year-on-year decrease of 37.1%, and the rate of the three-fee was 7.16%, a decrease of 0.53% from the beginning of the year.
company continues to increase R&D investment and improve its core competitiveness. In 2021, the company's R&D expenses were 154 million yuan, a year-on-year increase of 61.93%; R&D accounts for 5.95% of revenue, mainly due to the company's continued increase in R&D efforts and R&D investment. From January to September 2022, R&D expenses were 126 million yuan, a year-on-year increase of 26.99%; R&D accounted for 6.05% of revenue.
2. Magnetic materials: The product matrix is rich, and downstream demand is strong
Magnetic materials refer to substances composed of transition elements iron, cobalt, nickel and their alloys that can directly or indirectly generate magnetic properties.
magnetic materials have different classification standards: divided by material and structure, magnetic materials include two categories: metal and alloy magnetic materials and ferrite magnetic materials; divided by function, mainly including permanent magnet materials, soft magnetic materials and functional magnetic materials.
Among them, permanent magnet materials can be divided into three categories according to the element composition, permanent magnet materials can be divided into three categories: metal permanent magnet, ferrite permanent magnet and rare earth permanent magnet; soft magnetic materials mainly include four types: metal soft magnet, ferrite soft magnet, amorphous soft magnet, and nanocrystalline soft magnet.
.1 Soft magnetic material: Layout soft ferrite, extending downward industrial chain
Soft magnetic material is a magnetic material with low coercivity and high magnetic permeability . It is easy to magnetize and demagnetize. Its main function is the conversion and transmission of magnetic permeability and electromagnetic energy, and is widely used in various electrical energy conversion equipment. Soft magnetic materials mainly include metal soft magnetic materials, ferrite soft magnetic materials and other soft magnetic materials.
company's soft magnetic materials and device products include trimanium tetraoxide, iron silicon powder, iron silicon aluminum powder, manganese zinc/nickel zinc ferrite, transformer, etc.; among them, iron-based soft magnetic powders such as iron silicon powder and iron silicon aluminum powder can be used to produce soft magnetic metal magnetic powder cores.
soft ferrite:
soft ferrite is a magnetic oxide with Fe2O3 (commonly known as " iron red "), trimanganese tetraoxide, nickel oxide and zinc oxide as the main raw materials, and is produced by powder metallurgy method. According to the composition, soft ferrite is mainly divided into manganese zinc system, nickel zinc system and magnesium zinc system. Among them, manganese zinc power ferrite is the most produced and most widely used soft ferrite material, accounting for about 70% of the total output of soft ferrite; nickel-zinc-type ferrite accounts for about 10%, while magnesium-zinc-type and other types of ferrite accounts for less than 20%.
soft ferrite has high permeability, high resistivity, low loss and other characteristics at high frequency. It can play the role of power conversion, power conversion, and anti- electromagnetic interference. At the same time, it is convenient for batch production and mechanical processing to make magnetic core of various shapes, and has a low cost.
Therefore, soft ferrite is mainly used induction, coupling, conversion, transformation, transmission, isolation and absorption of electromagnetic signals in electronic systems. Its biggest purpose is to make various electronic transformer , inductor , filter (EMI), etc.; it can be widely used in terminal products such as new energy, consumer electronic , mobile communications, etc. Among them, the communication field is the most used, accounting for about 22%, followed by home appliances (19%), photovoltaics and wind power and other new energy fields (17%).
layouts high-performance soft ferrite, and the company's industrial chain extends to the downstream to open up the industrial chain.
1) The company announced the plan for the private placement in September 2020. The company plans to invest in the construction of four soft ferrite powder production lines, with an annual designed powder production capacity of 20,000 tons; it plans to build a soft ferrite core production line with 21 sintering kilns as the core, with an annual designed sintering capacity of 15,000 tons. Among them, powder production is the precedent process of magnetic core production.The project construction period is 24 months, the trial production period is 12 months, and construction has not yet begun. The target market for high-performance soft ferrite cores involves emerging application fields such as 5G communications, automotive electronics, photovoltaic new energy, and is optimistic about its future market prospects.
2) In 2021, the company acquired Jinning Sanhuan, and its current shareholding ratio has reached 51% (completed and consolidated). Jinning Sanhuan has a production capacity of 5,000 tons of soft ferrite, and has relevant process technology and a good customer base.
Metal soft magnetic powder core:
Metal soft magnetic powder core is a magnetic core made of metal and metal alloy soft magnetic materials mixed with an insulating medium, and then produced through powder metallurgy technology. It is the core material for the manufacture of inductance component . It has the characteristics of distributed air gap, good temperature characteristics, small loss, good DC bias characteristics, and high saturation flux density. It can meet the requirements of high efficiency, high power density and high frequency of electrical energy conversion equipment. It is widely used in electronic communications, radar , mobile phones, photovoltaic power generation, new energy vehicle , 5G new infrastructure, rail transit and other fields.
With the development of photovoltaics, new energy vehicles, energy storage and other industries in terminal application fields, it is expected that the demand for metal soft magnetic powder cores will reach 20.1 tons in 2025.
1) Photovoltaic and energy storage: photovoltaic inverter is the same as energy storage inverter. The two core key inductor components of inverter are Boost boost inductor and Inverter inductor. Most of the magnetic materials of these two inductor components use high-performance ferrosilicon powder core materials. As the photovoltaic installed capacity maintains a high growth rate and the penetration rate of string photovoltaic inverters continues to increase, the demand for metal soft magnetic powder cores has further increased; for energy storage, according to news statistics, more than 20 provinces have required or recommended that new energy power stations be equipped with energy storage, with a configuration ratio of about 10%, and a configuration time of about 2h.
2) New energy vehicles and charging piles: New energy vehicles are an inevitable trend in the future development of automobiles, and charging piles, as the energy supply device of new energy vehicles, will develop vigorously accordingly.
According to statistics from the China Association of Automobile Manufacturers, my country's new energy vehicle sales increased from 768,000 in 2017 to 3.545 million in 2021. The CAGR from 2017 to 2021 reached 46.6%, and its market penetration rate increased from 2.7% to 13.5%, making China the world's largest new energy vehicle market. According to the forecast of Huajing Industrial Research Institute, the domestic demand for metal soft magnetic powder cores is expected to reach 201,000 tons by 2025, with a market size exceeding 7.52 billion yuan, and the CAGR from 2020 to 2025 will be 19.6%.
Currently, the company has a capacity of about 2,600 tons of iron silicon powder and a capacity of 1,000 tons of metal magnetic powder core. In the future, the production capacity is expected to expand to 6,600 tons of soft magnetic powder and 5,000 tons of soft magnetic powder core.
Company wholly-owned subsidiary Hunan Special Materials mainly produces metal soft magnetic powders and devices, trimanganese tetraoxide, etc., and has a production capacity of 600 tons of iron-silicon powder. It was acquired by China Steel Tianyuan in 2017. It also raised funds to build an annual production capacity of 1,000 tons of metal magnetic powder core project and an annual production capacity of 2,000 tons of aerosolization preparation iron-silicon powder powder project. It has now been put into production as scheduled. The company now has a production capacity of 2,600 tons of iron-silicon powder powder and a 1,000 tons of metal magnetic powder core production capacity. It is currently promoting the expansion and expansion of metal magnetic powder core production line, with an additional production capacity of 4,000 tons/year. At the same time, it is building a 4,000 tons of metal soft magnetic powder production line and some technical transformation projects for the newly added metal magnetic powder core production line.
Hunan Special Materials has accumulated many years of rich technology and experience in soft magnetic material production.
In December 2014, a series of alloy powders such as atomized iron-silicon powder, atomized iron-silicon aluminum, and atomized iron-nickel alloy were successfully developed. In 2014, a pilot line for aerosolization preparation of iron-silicon powder was built, and relevant technical patents were also applied for; later, in 2015, the research and development of magnetic powder core products was completed, and the research on powder insulation coating, press molding, heat treatment and other processes was completed. At the same time, the core of metal magnetic powder cores had been fully mastered. Technology; In June 2019, the company independently developed the "High-efficient atomization preparation ultra-fine metal soft magnetic powder technology" and passed the evaluation of the scientific and technological achievements of the expert group. This technology solved the problems of low powder atomization efficiency, poor microscopic powder form, high magnetic powder core loss, and low DC superposition performance. It has obtained national invention patent html and 2 utility model patents. FeSi, FeNi50, FeSiAl and other products have been approved by third-party laboratories.Hunan Special Materials' technical reserves in magnetic cores, ferrosilicon pulp and other fields will help listed companies further strengthen diversified operations, improve their risk resistance, and help the sustainable development of listed companies.
.2 Permanent magnet material: rare earth permanent magnet and ferrite dual drive, with broad market prospects
permanent (hard) magnetic material refers to a strong magnetic material with strong anti-demagnetization ability and high residual magnetic induction strength. Commonly used permanent magnet materials are divided into aluminum nickel cobalt -type permanent magnet alloy, iron chromium cobalt -type permanent magnet alloy, permanent magnet ferrite, rare earth permanent magnet materials and composite permanent magnet materials, etc.
Ferrite permanent magnet and neodymium iron boron each have their own advantages and their application focuses.
1) The magnetic properties such as neodymium iron boron coercive force and magnetic induction strength are better than ferrite;
2) In terms of price, ferrite has more advantages and is much cheaper than neodymium iron boron magnets;
3) Permanent magnet ferrite has good temperature resistance, while neodymium iron boron usually can only withstand about 80 degrees. If this working temperature exceeds this working temperature, demagnetization will occur;
4) Ferrite has very good stability. It itself is an oxide , which is very stable. Neodymium iron boron is an alloy, which is easy to oxidize and powder, and must be protected by coating.
Therefore, ferrite permanent magnet and neodymium iron boron each have their own advantages, and the influence of objective factors such as production process difficulty and raw material supply is difficult to replace each other. It is expected that benefiting from the rapid development of downstream fields in the future, the demand for the two products will continue to rise, and the quality and competitiveness will be continuously improved.
NdFeB: the most cost-effective and widely used rare earth permanent magnet material
NdFeB has a wide range of application prospects. Rare earth permanent magnet device products are neodymium iron boron products made of iron, neodymium, boron and a small amount of additives dysprosium and terbium as raw materials. They are currently the mainstream rare earth permanent magnet materials in the market and are widely used in aerospace, new energy vehicles, energy-saving frequency conversion air conditioners, industrial energy-saving motors, consumer electronics, rail transit and other fields.
NdFeB belongs to the processing and manufacturing industry, and sintered NdFeB is the most widely used and has the best performance.
According to different production processes, NdFeB permanent magnet materials can be divided into sintering, bonding and hot-pressing NdFeB. Sintered NdFeB is made of powder metallurgy technology, made of powder made of melted alloy and pressed in a magnetic field; bonded NdFeB is made of extruded NdFeB magnetic powder and resin or rubber; hot-pressed NdFeB is made by induced by slow and large-scale hot-pressing deformation of NdFeB fast quenching magnetic powder to produce excellent full-density anisotropic magnets. Compared with sintered NdFeB, bonded NdFeB is not easy to corrode and has a lower production difficulty, but its magnetic performance is worse than sintered NdFeB.
According to the China Rare Earth Industry Association, in 2021, the output of major rare earth permanent magnet materials will maintain a steady growth. The output of sintered NdFeB is 207,100 tons, an increase of 16% year-on-year; the output of bonded NdFeB is 9,380 tons, an increase of 27.2% year-on-year; the output of samarium-cobalt magnet is 2,930 tons, an increase of 31.2% year-on-year.
New energy vehicles are the core driving force for the growth of demand for high-performance neodymium iron boron.
1) New energy vehicles: permanent magnet synchronous motor uses high-performance neodymium iron boron to generate a rotor magnetic field, which has the advantages of high power density, large starting torque, high extreme speed, excellent braking performance, and small pulsation of torque . It has a wide range of applications in the field of new energy vehicles. With the promotion of low-carbon and environmental protection demand and the energy revolution, demand for the new energy vehicle industry has ushered in an explosion. According to data from the China Association of Automobile Manufacturers, from 2017 to 2021, my country's demand for new energy vehicles increased from 768,000 to 3.545 million, with a CAGR of 46.6% in four years, and the latest penetration rate exceeded 30%. According to data, the consumption of neodymium iron boron in new energy vehicles is around 3kg. With the rapid development of new energy vehicles, it will become the core driving force for the growth of high-performance neodymium iron boron demand.
2) Wind power: Under the background of "dual carbon" of , wind power installed capacity is a major trend in the times. Bloomberg New Energy Financial Data predicts that the global wind power installation volume may reach 165GW from 2021 to 2030. According to CWEA, the penetration rate of direct drive motors is above 30%. Given its irreplaceable advantages, its penetration rate in wind turbines is expected to gradually increase in the future, which will drive the continued growth of neodymium iron boron consumption in the wind power field.According to Frost and Sullivan's forecast, the global consumption of rare earth permanent magnet materials will increase to 305,200 tons by 2025, and the CAGR will reach 7.8% from 2020 to 2025.
At present, the company's sintered NdFeB magnet production capacity is 2,000 tons, and plans to expand production to 10,000 tons in the future; through technical transformation, the performance of NdFeB products is continuously improved, while reducing costs.
NdFeB permanent magnet material is mainly produced by the company's NdFeB magnetic material manufacturing department. It is a rare earth permanent magnet manufacturer with a certain industry reputation and high customer recognition in China. It currently has a production capacity of 2,000 tons of sintered NdFeB magnets, and plans to expand production to 10,000 tons in the future. The rare earth permanent magnet grain boundary diffusion technology adopted by
has further reduced the content of rare earth metal , and the material cost has been greatly reduced. High abundance Ce is used in neodymium iron boron magnets to achieve industrialization. Currently, more than 70% of the company's products use this process.
permanent magnet ferrite: core component of micro-motor
permanent magnet device includes permanent magnet ferrite device, which is a ferromagnetic composite oxide composed of iron oxides and one or more other metal oxides, such as barium ferrite (BaFe12O19) and strontium ferrite (SrFe12O19), etc. It is characterized by high resistivity, which is particularly conducive to high frequency and microwave applications. It is widely used in automotive-related motor manufacturing, smart home, smart wearable, new energy, big data and other fields.
my country is a major producer of permanent magnet ferrite, with its production ranking first in the world. Since the 21st century, developing countries represented by China have undertaken the transfer of most permanent magnet ferrite industries in developed countries. In recent years, my country's permanent magnet ferrite production has remained above 500,000 tons, accounting for about 70% of the global output, ranking first in the world.
permanent magnet ferrite production level has made great progress, comparable to developed countries. With the continuous deepening of the application market, my country's permanent magnet ferrite industry has developed rapidly in recent years, and the technological gap with developed countries is getting smaller and smaller. It has the strength to produce high-performance permanent magnet ferrite, benchmarking the FB9 and FB12 series products of Japan's TDK.
permanent magnet ferrite wet-pressure magnetic tiles are the core components of downstream micro-type motors. With the acceleration of industrial automation, home automation , and automotive intelligence, the global market demand for micro-type motors has formed, which has prompted the permanent magnet ferrite industry to maintain rapid development.
In recent years, the micro-special motor market has maintained a continuous growth state. According to statistics from the Huajing Industrial Research Institute, my country's micro-special motor production CAGR from 2014 to 2020 was 4.79%, and the apparent demand CAGR is about 4.87%. The demand for permanent magnet ferrite is positively correlated with the micromotor industry.
downstream demand field of permanent magnet ferrite is developing rapidly and the market is broad.
1) Automobile: Due to its excellent characteristics such as good temperature adaptability and corrosion resistance, permanent magnet ferrite has been widely used in three major parts of the automobile engine, chassis, and body and accessories. With the intelligence of automobiles and the improvement of automation level, the number of permanent magnet ferrite DC motors will increase significantly, especially new energy vehicles, which will promote a significant increase in the demand for permanent magnets in the automotive field.
2) Frequency converter home appliances: high-performance permanent magnet ferrite is an important component of DC frequency converter motors such as home appliances such as variable frequency air conditioners, variable frequency refrigerators and variable frequency washing machines. With the steady and continuous increase in the permeability of variable frequency appliances, the demand for permanent magnet ferrite has reached a higher level.
According to the forecast of the Huajing Industry Research Institute, the domestic demand for permanent magnet ferrite in 2022 will be 748,000 tons, of which 420,000 tons and 158,000 tons of demand respectively in the automotive and home appliance fields will contribute to the demand; it is expected to reach 1.014 million tons by 2025, with a CAGR of 8.9% from 2022 to 2025. Overall, permanent magnet ferrite is in short supply and the industry will maintain a high prosperity.
Company has advanced technology and technology, and has a high-performance permanent magnet ferrite production capacity of 20,000 tons. Its planned future production capacity will be expanded to 40,000 tons.
permanent magnet ferrite is mainly produced by its subsidiary Tongli Magnetic Materials. Its performance is comparable to that of Japanese TDK-level FB6, FB9, and FB12 series products (benchmarking the highest performance products in China). In recent years, six new products have been developed, including high-field strength multi-pole magnetic rings for BLDC high-performance motors and magnetic tiles for automotive start-up motors.
At present, the company has put into production capacity of 20,000 tons; in April 2021, funds raised through private placement of stocks are used to build 9 ferrite permanent magnet device production lines, with a high-performance permanent magnet ferrite production capacity of 20,000 tons, mainly used for motor products in high-end home appliances and automobiles, with high added value and strong market competitiveness of this project products.
is expected to have a construction cycle of 2 years. After the production reaches full capacity, the company's total production capacity of permanent magnet ferrite will reach 40,000 tons.
iron concentrate roasting oxidation preparation iron red technology has been independently developed successfully. In the later stage, it can ensure that pre-fired materials can be self-sufficient and have outstanding cost advantages. Iron concentrate powder preparation technology is to purify and prepare high-consistent iron oxide from iron ore raw ore as a base material, and use fully automatic production line to produce high-quality permanent magnet ferrite pre-fired material with high magnetic properties and stable physical characteristics.
produces pre-sintered materials through this technology and has the following advantages:
1) Iron red produced by oxidized using super iron concentrate as raw material has cost advantages compared with pickled iron red;
2) Quality adjustment can be made according to the performance requirements of the product to improve the company's industry competitiveness in permanent magnet ferrite;
3) Iron concentrate produced in Ma'anshan and surrounding areas in the company are prepared as raw materials, with sufficient raw materials supply, stable quality and low price; its surrounding magnetic materials industry foundation is good, with many supporting enterprises in raw materials, and the supply of raw materials is fully guaranteed;
4) Raw materials do not contain chloride ion , the production process is safer and more environmentally friendly, realizing the green manufacturing of permanent magnet ferrite .
.3 Trimanium tetraoxide: With the increase in demand for ferrite
Trimanium tetraoxide can be divided into electronic grade and battery grade. Among them, battery-grade trimanium tetraoxide is mainly used in lithium manganese oxide , ternary materials, and lithium iron phosphate. As the positive electrode material for lithium batteries, sodium battery , etc., it can basically replace the application of traditional electrolytic manganese dioxide in the battery field; electronic-grade trimanium tetraoxide is an important raw material for the preparation of soft magnetic materials such as manganese zinc ferrite, and is widely used in automobiles, photovoltaics, electronics, home appliances, 5G communications, power, charging piles and other industries, and can also be used in optical glass, thermistor and other functional materials.
my country's current annual output of trimanganese tetraoxide is about 100,000 tons, and the electronic grade accounts for more than 90%. According to Xinsijie Industrial Research Center and Limu Information Consulting Data, my country's current production capacity and output of trimanganese tetraoxide rank first in the world. In 2020, China's production of trimanganese tetraoxide was 93,700 tons, an increase of 8.9% year-on-year, and the output in the first half of 2021 was 52,700 tons; among which, China's battery-grade trimanganese tetraoxide production in 2020 was 6,403.3 tons, a year-on-year increase of 44.2%, and the CAGR from 2017 to 2020 was 33.3%; in the first half of 2021, China's production of battery-grade trimanganese tetraoxide production was 4,303.0 tons, a year-on-year increase of 34.4%.
Trimanganese tetroxide is upstream of soft ferrite. soft ferrite preparation requires three steps, "raw materials → powder → device". In addition to iron red, trimanganese tetraoxide is the second major raw material of manganese-zeb ferrite, and accounts for a large proportion of the cost of soft magnet ferrite raw materials. From the perspective of the industrial chain, soft ferrite is the downstream of trimanium tetraoxide, and the demand for trimanium tetraoxide mainly depends on the market demand for soft magnetics.
As early as 2015, the company entered the lithium battery positive electrode material business and began to develop battery-grade manganese tetraoxide production. In order to ensure the stability of production and operation, the company plans to replace the existing production line planned to be demolished by the construction of the "annual production of 20,000 tons of lithium batteries and soft magnetic high-purity manganese tetraoxide project".
The total investment of this project is 103.3 million yuan, of which the construction investment is 66.99 million yuan. The main construction content includes an annual output of 14,000 tons of NCQ-01 product production line, an annual output of 3,000 tons of high-purity, high specific surface area, and a battery-grade trimanganese tetraoxide production line. After the project reaches full production, it can achieve annual sales revenue of RMB 210.28 million, annual profit after tax of RMB 17.53 million, and financial internal rate of return of RMB 20.28%. The battery-grade manganese tetraoxide produced by the project can replace the traditional electrolytic manganese dioxide for the production of lithium manganate battery positive electrode material.The lithium manganese oxide positive electrode material prepared by trimanganese tetraoxide has unique advantages: good safety, excellent low-temperature discharge performance, improved cycle times and high discharge capacity. It is an ideal lithium battery positive electrode material.
company has become the world's largest manganese metal manufacturer through the acquisition of Hunan Special Materials, and plans to expand the production of 10,000 tons of electronic grade manganese tetraoxide in the future. Hunan Special Materials is the world's third largest manufacturer of trimanium tetraoxide, focusing on ordinary trimanium tetraoxide and having technical reserves in soft magnetic cores, iron-silicon powder and other fields; China Steel Tianyuan is the world's second largest manufacturer of trimanium tetraoxide, focusing on the development of new application fields such as high specific surface area and high-end trimanium tetraoxide and trimanium tetraoxide. After the reorganization of
is completed, China Steel Tianyuan will become the world's largest manufacturer of trimanium tetraoxide, with a full range of soft magnetic trimanium tetraoxide and a variety of non-soft magnetic trimanium tetraoxide production and R&D capabilities, which will improve the competitiveness and bargaining power of listed companies in the market.
3. Layout the positive electrode materials of new energy batteries and seize the opportunities of the times
The company is based on the industrialized battery-grade iron phosphate and battery-grade manganese tetraoxide, and continues to cooperate in the field of new energy with multiple parties in the principle of complementary advantages. Among them, horizontal (new energy materials field): lithium battery materials + hydrogen fuel cell related materials, vertical (industrial chain distribution): raw materials (mine) + iron phosphate + lithium iron phosphate, trimanganese tetraoxide + lithium manganese manganese/lithium-rich manganese based materials, raw materials (mine) + iron manganese phosphate + lithium iron manganese phosphate; low cobalt-free cobalt/precursor and materials + solid semi-solid battery materials, hydrogen fuel cell catalyst + membrane electrode, metal bipolar plate.
.1 The patent is invested in Tongling Nayuan to explore a new track - iron phosphate
iron phosphate, also known as high-iron phosphate and iron orthophosphate, is the salt that acts on iron salt solution and sodium phosphate. Among them, iron is positive trivalent, mainly used in lithium iron phosphate battery materials, catalysts and ceramics. Although the energy density of lithium iron phosphate batteries is slightly worse than that of ternary lithium batteries, they have obvious advantages in cost and safety. With the development of technology, lithium iron phosphate batteries are becoming more and more popular, and the installed capacity has exceeded ternary lithium batteries.
jointly established Tongling Nayuan to lay out iron phosphate business. In August 2013, the company decided to jointly establish Tongling Nayuan Materials Technology Co., Ltd. after deliberation and review and decision with Anada. The company invested 3.6 million yuan in patented iron phosphate production technology, with a shareholding ratio of 30% (it has now dropped to 27.12%). Anada uses ilmenite as raw material and uses the titanium dioxide production process for sulfuric acid, among which the by-product ferrous sulfate produced by the crystallization process is the main raw material for the preparation of ferrous phosphate. In 2015, the Tongling Nayuan iron phosphate project was completed and put into production.
In July 2020, the original shareholders of Tongling Nayuan invested an additional investment of 77 million yuan in the same proportion (of which China Steel Tianyuan 19.8 million yuan) for the construction of a 50,000-ton battery-grade iron phosphate project. The first and second phases were completed and put into production in February 2021 and August 2021 respectively, and the Tongling Nayuan production capacity reached 50,000 tons. In mid-2022, the production capacity of 50,000 tons will be fully operational.
cooperates with Hunan Yuneng to deepen the layout of iron phosphate. In April 2022, Tongling Nayuan cooperated with Hunan Yuneng to establish Tongling Anweining New Energy Technology Co., Ltd., with Tongling Nayuan investing 78 million yuan, accounting for 65%, and a new high-performance iron phosphate project of 50,000 tons/year. In November 2022, the newly built high-compressed iron phosphate project was completed and put into production, and Tongling Nayuan reached 100,000 tons/year iron sulfate production capacity. The company expects to build a 50,000 tons/year iron phosphate production capacity project in 2023. If it is completed on schedule, it is expected that the company's iron phosphate plant production capacity will reach an annual output of 150,000 tons.
.2 Cut into manganese-based positive electrode material and create a new growth engine
Adding manganese elements on the basis of lithium iron phosphate has gradually become a breakthrough technology to increase voltage. lithium manganese iron phosphate (LiMnFe_1-xPO4, LMFP) (where x is the ratio of manganese iron phosphate) battery has an energy density of 15%-20% higher than that of lithium iron phosphate batteries. In addition, LMFP crystals have an olivine-shaped structure and have advantages in safety. At present, the industry basically recognizes that lithium manganese iron phosphate is the best technical direction, and many companies have announced the construction of a 10,000-ton lithium manganese iron phosphate project.
is the world's major manganese tetraoxide manufacturer. battery-grade manganese trioxide is an important raw material for lithium manganate and lithium manganese phosphate. It is also widely used in new energy vehicles, photovoltaics and other fields, as well as functional materials such as optical glass and pigments, with a strong development trend. China Steel Tianyuan is the world's major high-purity trimanium tetraoxide production enterprise, with a battery-grade trimanium tetraoxide production capacity of 5,000 tons, and is basically in full production state. Affected by the full orders for the trimanganese tetraoxide business, the company's industrial raw materials operating income increased by 41.84% year-on-year in 2022H1.
Based on the future demand for high-performance lithium manganese oxide market and potential lithium manganese phosphate market, the company is planning to add 10,000 tons of battery-grade trimanganese tetraoxide production capacity, and the production capacity is expected to be released in early 2023. In addition, the company's low-cost research on key technologies of trimanganese tetraoxide and industrial R&D projects are underway. The advantages of
sodium battery are gradually emerging. Since 2021, the price of lithium carbonate has increased significantly, driving the cost of lithium batteries, and the profits of downstream industries have been greatly compressed. Because of its rich resources, sodium ion batteries have cost advantages over lithium batteries and have become the first choice alternative to the current industrial chain. It is expected that the cost of sodium ion batteries can be reduced to 0.5-0.6 yuan/degree after mass production, which is 40% lower than the cost of lithium iron phosphate.
positive electrode material is a key component that affects battery energy density and cycle life. The main positive electrode materials of sodium ion batteries include transition metal oxides, Prussian blue, polyanion, etc. Among them, the layered oxide route and the Prussian blue route will use manganese elements, and manganese becomes the second common element after sodium.
Zhonggang Tianyuan is the main enterprise in producing trimanium tetraoxide: has a total of 55,000 tons/year trimanium tetraoxide production capacity (battery grade 5,000 tons, electronic grade 50,000 tons). The company plans to expand the production capacity of 10,000 tons of trimanium tetraoxide each and continue to make efforts in the positive electrode materials of new energy batteries.
4. Testing business: Focus on high-end testing field, strengthen testing technology capabilities
.1 China Steel National Inspection: The authoritative organization in the infrastructure field
Third-party inspection and testing will usher in development opportunities and have broad market prospects. The regional characteristics of the inspection and testing service industry are relatively obvious. Most companies are concentrated in sub-sectors such as building materials and engineering, environmental monitoring, motor vehicles, electronics and electrical appliances, food, medical testing, etc., and operate across regions and across fields. There are few industry leaders with large market share.
Driven by domestic policy opening and industrial development in recent years, third-party testing ushered in the opportunity for rapid development. The market size of the domestic quality inspection and testing industry has continued to rise, and China has gradually become a "world power" in the quality inspection industry.
According to statistics from the State Administration for Market Regulation: As of the end of 2021, the number of inspection and testing institutions across the country has exceeded 50,000, with operating income exceeding 400 billion yuan, with an average annual number of institutions increasing by more than 10%, and operating income growth of more than 12%. my country has become the fastest growing and most promising inspection and testing market in the world. With the continuous deepening of the "deregulation, regulation and service" reform, my country's inspection and testing market will show a rapid development momentum, with a compound growth rate expected to reach 11.0% in the next five years, and the market size is expected to exceed 700 billion yuan in 2026, of which the market size in the infrastructure inspection field is estimated to be about 150 billion yuan.
was established in 1985. The National Metal Products Quality Supervision and Inspection Center (Qualification Inspection Center of Zhengzhou Metal Products Research Institute of China Steel Group, a wholly-owned subsidiary of China Steel Products Institute) is the first third-party fair technical inspection agency approved by the General Administration of Quality Supervision, Inspection and Quarantine, with 37 years of industry experience.
company has been approved by the State Administration for Market Regulation. Up to now, it has more than 3,900 items including 16,000 parameters and 5,000 products, covering more than 3,900 developed national standards, industry standards, national standards, US, Europe and Japan and other developed national standards, self-developed standards, etc.; it has also obtained the comprehensive highway Class A testing qualification and was successfully selected into the "2021 Railway Engineering Quality Supervision and Inspection Agency List".
is one of the authoritative inspection and testing institutions in the field of large infrastructure in China, and its testing business involves multiple fields.
inspection business covers: project projects (railways, highways, bridges, tunnels, steel structure projects, civil defense projects, etc.), metal and alloy materials and products (wire wires, steel profile steel products, iron-aluminum and copper alloys, etc.), polymers and composite materials (rubber, coatings, waterproof materials, plastic pipes, geotechnical materials, etc.), building materials (cement, concrete, coarse and fine aggregates, etc.), coal mine equipment.
Company has authoritative testing qualifications in China and has a complete range of categories.
has nearly 20 qualifications including CAL, CMA, ILAC+CNAS, Ministry of Housing and Urban-Rural Development’s witness sampling/main structure/foundation foundation/steel structure engineering/urban bridge qualifications, Ministry of Transport’s comprehensive Class A and bridge tunnel special inspection qualifications, Ministry of Transport’s highway engineering Class A and highway electromechanical supervision qualifications, Ministry of Transport’s safety Class A and Class A testing qualifications, metrological calibration, judicial appraisal, ecological environment, special equipment inspection and testing, etc.
The company's headquarters is in Zhengzhou and continues to establish branch companies and offices across the country. Currently, the company has 10 branch offices and laboratory subsidiaries in Jiaozuo, Hebei, Anhui, Sichuan, Yunnan, Guangdong, Guizhou, Jilin and other places, forming a nationwide testing service network with strong strength.
.2 The business maintains a high growth rate, with a gross profit margin of more than 50%
detection business is one of the company's main businesses and has maintained a high growth rate in recent years.
revenue side: In 2021, the revenue of the inspection and testing business was 449 million yuan, a year-on-year increase of 20.68%, accounting for 17.37% of the total revenue; the CAGR from 2017 to 2021 is about 36.3%, and has maintained a high growth rate in recent years, thanks to the company's active expansion of its business.
gross profit end: inspection and testing business has strong profitability, and the gross profit margin remains above 50%. In 2021, the gross profit margin of the testing business was 49.52%, higher than other listed companies in the industry such as Radio and Television Metering (42.89%), Pony Testing (46.56%), and National Inspection Group (47.61%).
.3 Enter the testing business in other fields, and at the same time use digitalization to empower
to enter the testing business in other fields, increasing market share. In 2019, the company acquired 80% of Guizhou Yeqian's equity for a price of 5.28 million yuan, opening up the construction inspection market. Jilin Zhengda has the comprehensive Class A qualification for highway engineering of the Ministry of Transport. In 2020, the company decided to acquire 100% of its equity, which means that the company has added new highway inspection and testing qualifications. Recently, the company completed the integration with Jilin Zhengda, which became a wholly-owned subsidiary of the company's controlling subsidiary, China Steel Products Institute.
vigorously promotes the Internet+ detection business model and the level of automation and intelligence of detection equipment. vigorously promotes the laboratory information management system of the LIMS Quality Inspection Center, covering business processes, finance, samples, personnel, equipment, customers, collection equipment management, electronic records, and various data statistics, realize online management of the entire process of the inspection business, establish a strong correlation between business data and financial data and connect with the ERP system; in 2020, the company issued non-public stocks to raise funds, intending to invest 93 million yuan to build an intelligent information construction project for inspection and inspection, with a construction period of 24 months. The overall construction plan of this project is to build an intelligent and information system in the current inspection and testing process of the quality inspection center, and incorporate the work of the department and various branches into an intelligent information management system based on the Internet and cloud platforms, break through regional and time barriers, and realize integrated barrier-free collaborative inspection work in multiple places.
5. Baowu trusts China Steel Group, bringing industrial synergy advantages
Baowu trusts China Steel Group, aiming to resolve Sinosteel Group's debt risks. In the past few years, due to radical expansion and large-scale debt, China Steel Group has overdue loans in 2014. Later, in 2016, it signed an agreement with six creditors including Bank of China to reorganize debts. Although the subsequent operating conditions improved, the debt ratio remained high.
Therefore, on October 11, 2020, China Steel Tianyuan Co., Ltd. received a notice from China Steel Group Co., Ltd. that it plans to be entrusted by China Baowu Iron and Steel Group Co., Ltd. On October 19, 2020, the State-owned Assets Supervision and Administration Commission officially announced that China Baowu will trust China Steel Group, and the operation and management rights will be handed over to Baowu to ensure the stability of China Steel Group's production. This entrusted matter does not involve the company's major asset restructuring matters, nor will it have an impact on the company's normal production and operation activities.
The controlling shareholder of the company is China Steel Capital, and the actual controller is the SASAC.
China Steel Group holds a total of 213 million shares of the company through its holding subsidiary China Steel Co., Ltd. and its enterprises under its control, accounting for 28.3% of the company's total share capital. Among them: China Steel Capital Holding Co., Ltd., a wholly-owned subsidiary of China Steel Co., Ltd., directly holds 123 million shares of the company, accounting for 16.25% of the company's total share capital. China Steel Capital is still the controlling shareholder of the company, and the State-owned Assets Supervision and Administration Commission is still the actual controller of the company. As of now, neither the company's controlling shareholder nor actual controller has changed.
China Baowu Iron and Steel Group Co., Ltd. (hereinafter referred to as China Baowu) was jointly reorganized by the former Baosteel Group Co., Ltd. and Wuhan Iron and Steel (Group) Company. It is committed to building a "one-based and five-yuan" pattern based on green and high-quality steel manufacturing, and the coordinated development of new materials industry, smart service industry, resource and environment industry, industrial park industry, industrial finance industry and other related industries.
Baowu Group is a high-tech enterprise that provides comprehensive solutions for steel and advanced materials and industrial ecosystem services. In the future, it is expected to provide more industrial resource support to the company and promote the company's accelerated development.
l Baowu Group is the world's largest steel company and is expected to provide the company with high-quality iron red.
In 2021, China Baowu Steel's production reached 120 million tons, achieving a historic leap of "100 million tons of Baowu" and winning the championship of global steel companies. Tiehong is a by-product produced by domestic steel enterprises in the process of steel production. Therefore, Baowu has sufficient Tiehong production capacity and is expected to provide the company with high-quality Tiehong resources to ensure the company's raw materials supply.
l Baowu's new materials business segment can have more areas of intersection with the company's magnetic materials, which can exert industrial synergy.
main related subsidiaries include Baowu Carbon Industry, Baosteel Metals, Baosteel Packaging, Baowu Special Metallurgy and Wuhan Refractory Materials, and its business involves four core sectors: high-performance metal materials field, light metal materials field, high-tech carbon materials and fiber materials and new ceramic matrix composite materials. The two are related in terms of technology, production processes, clients, etc., and can exert industrial synergy and achieve win-win results.
6. Profit forecast
.1 Revenue forecast
is the world's leading magnetic material manufacturer, among which trimanganese tetraoxide is the world's number one. Benefiting from the rapid development of downstream fields such as photovoltaics, new energy, 5G applications, etc., the demand for soft magnetic, permanent magnet, metal soft magnetic powder cores has continued to rise, and production capacity is expected to be released with demand.
For this, we assume:
(1) Magnetic materials: the company's expansion project will continue to advance, put into production as scheduled, and the gross profit margin is stable; (2) Inspection business: maintain a growth rate of about 40%, and the gross profit margin remains around 50%; (3) Other businesses develop stably.
is expected to achieve operating income of 3.677/4.946/6.423 billion yuan in 2022/2023/2024, a year-on-year increase of 42.09%/34.54%/29.85% respectively; net profit attributable to shareholders was 371/470/604 million yuan, a year-on-year increase of 73.59%/26.62%/28.67%, respectively, and the corresponding EPS was 0.49/0.62/0.80 yuan respectively.
.2 Valuation
is based on the closing price of 10.13 yuan on November 25, 2022. The corresponding PEs of 2022-2024E are 21.01/16.59/12.89 times respectively. Taking into account the level of the same industry, we give the company 25 times PE, with the corresponding target price of 15.5 yuan.
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