The integrated layout has achieved cost reduction and efficiency increase, and CNGR's net profit in 2023 will continue to hit a record high

On April 24, CNGR (300919. SZ) released its 2023 annual report, during the reporting period, the company achieved operating income of 34.273 billion yuan, a year-on-year increase of 12.95%, and net profit attributable to shareholders of listed companies of 1.947 billion yuan, a year-on-year increase of 26.15%, continuing to maintain a growth trend. At the same time, the company plans to distribute a cash dividend of 11.60 yuan (tax included) for every 10 shares, and increase 4 shares for every 10 shares to all shareholders with capital reserves, without giving bonus shares.

The integrated layout realizes cost reduction and efficiency increase

CNGR is the world's leading ternary precursor industry leader, mainly engaged in the research and development, production, processing and sales of lithium battery cathode material precursors, the company's main products include ternary/iron phosphate precursors, cobalt tetroxide, which are used in the production of ternary cathode materials, lithium iron phosphate cathode materials, and lithium cobalt oxide cathode materials.

During the reporting period, benefiting from the rapid growth of the global new energy market, the total sales volume of the above-mentioned battery material system products exceeded 270,000 tons, maintaining a sustained growth trend. According to the data of Xinchun Information, the market share of the company's ternary precursor in 2023 will be 27%, ranking first in the industry.

In 2023, the continuous growth of CNGR's performance is inseparable from the cost reduction and efficiency increase achieved by the integrated layout. In addition, in order to effectively open up the front-end and back-end smelting links, the company has actively promoted the investment and construction of nickel smelting capacity in the four major bases of overseas Indonesia Morowali, Weidabe, South Kalimantan and North Morowali, as well as the domestic Tongren Industrial Base, Ningxiang Industrial Base and Qinzhou Industrial Base, so as to realize the diversification of nickel powder/bean, low glacial nickel, high glacial nickel, MHP and other nickel raw material refining, and successfully pull through" Laterite nickel ore-low glacial nickel-high glacial nickel-nickel sulfate-high nickel ternary precursor", from the resource end to the material end to achieve an integrated layout.

Under the guidance of the "New Four Modernizations" strategy of "technology diversification, globalization of development, digitalization of operations, and industrial ecology", CNGR has created an integrated closed-loop industrial model of "raw ore smelting, raw material refining, new energy material manufacturing, and terminal recycling" through upstream and downstream business extension and industrial chain cooperation. While strengthening the guaranteed supply of key raw materials, through industrial integration, it can effectively reduce comprehensive production costs, improve product profitability and enhance the company's competitive advantage.

The overseas layout was accelerated, and the Indonesian base was put into production

With the development of science and technology and the rise in the cost of fuel vehicles, the consumer demand for new energy vehicles has gradually increased, and the development of new energy vehicles has become a general consensus in major countries around the world. In order to better meet the rapidly growing demand for new energy battery materials in the international market, CNGR has comprehensively promoted the "globalization" strategy and realized the global supply of raw materials and global manufacturing of materials.

The company has accelerated the integrated layout of front-end and back-end smelting in Indonesia, established four raw material production bases in Indonesia, and established four raw material production bases in Morowali, Weidabe, South Kalimantan and North Morowali, with a production capacity of 195,000 metal tons of nickel resources under construction and the crude end of completed resources.

It is worth noting that at the beginning of 2024, CNGR's "globalization" has successively spread good news, Indonesia's North Morowali Industrial Base ushered in the first production line put into operation and successfully produced, and the first batch of more than 2,000 tons of nickel ice in Indonesia's Morowali Industrial Base arrived in China, laying a good foundation for the start of 2024 and the development of the whole year.

In addition, during the reporting period, in South Korea, CNGR signed a cooperation agreement with POSCO to plan the construction of 50,000 gold tons of battery-grade nickel sulfate and 110,000 tons of precursor materials to meet the needs of more than 1.2 million electric vehicle battery devices. It is worth mentioning that this is the industry's first "nickel + precursor" joint venture project, and it is also the first overseas refining and precursor integrated industrial base built by the company.

In Morocco, CNGR signed a cooperation agreement with AIMada, one of the largest private investment funds in Africa, to establish a joint venture to jointly build a ternary precursor integration, lithium iron phosphate integration, black powder recovery plant and a Morocco-China green energy industrial park, with an annual output of 120,000 tons of ternary precursors, an annual output of 60,000 tons of lithium iron phosphate and an annual processing of 30,000 tons of black powder recycling. At present, the construction of industrial bases in South Korea, Morocco and other countries is progressing in an orderly manner, and the project will further enhance the company's international competitiveness and influence after it is put into operation.

The rise of solid-state batteries has increased the demand for ternary precursors

Since the beginning of this year, "new quality productivity" has become a hot keyword, and new quality productivity is an advanced productivity quality that plays a leading role in innovation, gets rid of the traditional economic growth mode and productivity development path, has the characteristics of high technology, high efficiency and high quality, and conforms to the new development concept. In CNGR's view, the key to the development of new quality productivity lies in continuous technological innovation and scientific progress, the company continues to attach importance to basic research and high-tech research and development, strengthen the protection of intellectual property rights, and promote scientific and technological innovation.

During the reporting period, CNGR continued to increase R&D investment, with the amount of R&D investment reaching 1.056 billion yuan, accounting for 3.08% of operating income, and from 2020 to the end of 2023, the cumulative R&D investment exceeded 3.024 billion yuan, and the number of technical R&D team members increased from less than 1,000 in the same period in 2022 to more than 1,600 in 2023.

In terms of forward-looking technology, CNGR has increased R&D investment in combination with customer needs, developed precursor manufacturing technology with solid-state battery health chain, and solved the specific requirements of precursors used in solid-state batteries in terms of structure and strength. Among the company's main R&D projects, "ternary precursor *** nickel-manganese aluminum hydroxide technology research and development" is a precursor development project for solid-state battery projects.

Compared with liquid lithium-ion batteries, solid-state batteries have the advantages of good safety, high energy density, and fast charging speed, and can be divided into three types: semi-solid, quasi-solid, and all-solid, the difference lies in the quality of the liquid electrolyte contained, of which the all-solid-state battery does not contain any liquid electrolyte.

Since the beginning of this year, solid-state batteries have become a hot spot in the industry, mainly due to their application in many fields. GAC Aion's Haobo brand announced that it will release an all-solid-state battery, SAIC Group's super smart sedan Zhiji L6 is equipped with the industry's first mass-produced ultra-fast charging solid-state battery 1.0, and vivo released a new product X Fold3 series equipped with the industry's first semi-solid-state blue ocean battery. In addition to new energy vehicles, drones and eVTOLs and other aircraft are also trying to carry semi-solid-state batteries for related commercialization. Some industry insiders said that solid-state batteries have a long battery life and light weight, which can perfectly meet the requirements of aircraft for dead weight and endurance. With the rise of solid-state batteries, its high demand for ternary precursors will also promote the performance growth of CNGR.

In addition, during the reporting period, CNGR carried out innovation in key technologies such as high-quality ternary cathode material precursors, doped nickel-cobalt hydroxides, narrowly distributed spherical nickel-cobalt ternary hydroxides and hybrid nickel-cobalt ternary hydroxide preparation, and continuously realized the green manufacturing of ternary cathode material precursors for lithium-ion batteries. The company has upgraded its ESG strategy, identified the four pillars of sustainable development goals of "clean energy, resource recycling, health protection, and high-quality products", comprehensively promoted green manufacturing, and is committed to providing zero-waste, low-carbon, and recyclable new energy materials for the world.

The research report of Minsheng Securities pointed out that benefiting from the integration and cost reduction, CNGR's performance in 2023 will achieve stable growth and its profitability will continue to improve. Soochow Securities said that the company's cumulative cash dividends in 2020~2022 exceeded 300 million yuan, and the annual cash dividend ratio exceeded 10% of the net profit attributable to shareholders of listed companies.