Source: Times Business School
Author|Vic
Editor|Zheng Shaona
On April 29, GEM (002340.SZ) closed the daily limit, with a share price of 6.85 yuan per share, and a total market value of 35.179 billion yuan.
Times Business School observed that since April 24, GEM's share price has risen for four consecutive trading days, with a cumulative increase of nearly 17%. The reason may be related to the company's main business involving the concept of "automobile dismantling + lithium battery".
On the news side, on April 26, the Ministry of Commerce, the Ministry of Finance and other 7 departments jointly issued the "Implementation Rules for Automobile Trade-in Subsidy", which is expected to drive the rapid development of the waste automobile recycling industry.
In addition, from April 25 to May 4, the 2024 Beijing International Automobile Exhibition will continue to be held at the China International Exhibition Center in Beijing.
On April 29, Times Business School called the secretary of the board of directors of GEM to inquire about the reasons for the stock price change and the specific impact of the "trade-in" policy on the company's related businesses. The other party said that after the release of the "car trade-in" policy, the stock price performance of (power battery) recycling and other related sectors is relatively good, and for the company, the policy is indeed conducive to the development of the company's related business in the future.
The "trade-in" policy was introduced, and the concept of lithium battery + car dismantling was raised
From a policy point of view, GEM's two main businesses are expected to benefit from this round of "trade-in" policy.
According to the financial report, from 2021 to 2023, GEM's new energy battery materials business revenue accounted for 71.13%, 74.16% and 75.24% respectively, showing a year-on-year growth trend, and the revenue from the comprehensive utilization of waste resources accounted for 28.87%, 25.84% and 24.76% respectively.
In the new energy battery materials industry, the "car trade-in" policy is expected to reduce consumer replacement costs and boost consumer sentiment. At the same time, the policy will provide greater subsidies for new energy vehicles, which is expected to accelerate the substitution process of new energy vehicles for fuel vehicles, thereby benefiting GEM's new energy battery materials business.
According to the "Detailed Rules for the Implementation of the Automobile Trade-in Subsidy" (hereinafter referred to as the "Detailed Rules"), from the date of issuance of the "Detailed Rules" to December 31, 2024, individual consumers who scrap fuel passenger vehicles with emission standards of China III and below or new energy passenger vehicles registered before April 30, 2018, and purchase eligible new energy passenger vehicles, will be given a one-time fixed subsidy of 10,000 yuan.
At present, the penetration rate of new energy vehicles still needs to be improved. According to the statistics of the Ministry of Public Security in January 2024, by the end of 2023, the number of cars in the country will be 336 million, of which 20.41 million will be new energy vehicles, accounting for only 6.07%.
This round of subsidy policy is expected to drive the growth of sales in the domestic auto market. According to a report released by Everbright Securities (601788.SH) on April 27, it is expected that this round of scrapping and replacement can bring about 1 million to 2 million incremental sales to the domestic auto market under the stimulation of the subsidy policy. Among them, there are about 400,000-800,000 new energy passenger vehicles and 600,000-1.2 million fuel passenger vehicles.
From the perspective of GEM's related business, according to the 2023 annual report, the company's high-nickel precursor materials for ternary power batteries account for 15% of the global market, and 15% of the world's ternary new energy vehicles are installed. The rapid growth of sales of extended-range vehicles in the Chinese market will drive the market share of ternary lithium batteries to rise.
With the arrival of the wave of power battery retirement, the comprehensive utilization of waste resources industry is at the starting point of a long boom cycle, the "old for new" policy is expected to drive the rapid development of the waste automobile recycling industry, and boost the flow of waste vehicles into the compliance scrap channel, and promote the healthy and standardized development of the industry.
At present, the number of scrapped cars in the country should not be underestimated, approaching 10 million or more per year. On April 27, Cui Dongshu, secretary general of the Passenger Association, posted an article on his personal public account "Cui Dongshu", saying that after calculation, the net increase in the number of scrapped cars in the country in 2023 will be 7.56 million, a year-on-year increase of 32%, and it is expected that the number of scrapped cars in the country will reach nearly 10 million in 2024. In addition, GEM also said in its 2023 annual report that China is ushering in an explosive period of automobile scrapping, and it is expected that from 2030, the number of vehicles scrapped will reach more than 50 million per year.
According to a report released by CICC (601995.SH) in September 2023, the global lithium battery recycling market will reach 164.4 billion yuan by 2027.
According to the 2023 annual report, as of 2023, GEM has laid out 16 green recycling and waste recycling bases with electronic waste, scrapped vehicles, and retired power batteries as the main body in 11 provinces and cities across the country, covering more than 40% of China's land area.
At the same time, GEM has a number of national public technology research platforms such as the National Electronic Waste Recycling Engineering Technology Center, which is expected to benefit from the rapid development of this round of "trade-in" policy.
In the first quarter of 2024, the performance increased significantly, and the gross profit margin rebounded quarter-on-quarter
From a fundamental point of view, in 2023, GEM will achieve revenue of 30.529 billion yuan, a year-on-year increase of 3.87%, and a net profit attributable to the parent company of 934 million yuan, a year-on-year decrease of 27.89%. For the performance of increasing revenue but not increasing profits, GEM said in the annual report that the company's performance is mainly affected by the intensification of involution competition in the industry, the low operating rate, and the severe macro environment.
In the first quarter of 2024, GEM's performance increased significantly, achieving revenue of 8.354 billion yuan, a year-on-year increase of 36%, and net profit attributable to the parent company of 456 million yuan, a year-on-year increase of 164%, in addition, the company's gross profit margin in the first quarter was 13.29%, an increase of 3.81 percentage points quarter-on-quarter and 0.42 percentage points year-on-year.
According to the financial report, the reason for the growth of GEM's performance in the first quarter of 2024 is mainly due to the substantial increase in the production and sales of the company's main products. Among them, ternary precursor shipments increased by 113.72% year-on-year, cobalt tetroxide shipments increased by 293.38% year-on-year, nickel resource projects in Indonesia increased by 133.33% year-on-year, and recycling and dismantling power batteries increased by 27.47% year-on-year.
GEM said in its 2023 annual report that in 2024, the company's annual revenue target is 40 billion yuan, striving to exceed 43 billion yuan, with a year-on-year revenue growth rate of 31.02%-40.85%.
In addition, recently, with the introduction of the new "National Nine Articles", "dividends" have become a hot word in the capital market.
On April 12, the State Council issued the "Several Opinions on Strengthening Supervision and Preventing Risks and Promoting the High-quality Development of the Capital Market", which guides the construction of the capital market system from nine aspects. The document emphasizes that it is necessary to strengthen supervision in terms of cash dividends of listed companies and increase incentives for high-quality companies with dividends.
Times Business School observed that in recent years, GEM's dividend measures are also expected to win the favor of more investors. The company was listed on the main board of the Shenzhen Stock Exchange in January 2010 and has paid a total of 13 cash dividends in the 14 years of listing (no dividends in 2013). From 2021 to 2023, the company's cumulative dividend amount totaled 804 million yuan, accounting for 25.51% of the cumulative net profit attributable to the parent company of 3.154 billion yuan in the past three years.