GEM (002340): Leading company in renewable resources of ternary precursors

GEM (002340): Leading company in renewable resources of ternary precursors

This report reads: The company lays out five major industrial chains, and battery materials are currently the main source of revenue.

Through multiple acquisitions and self-built production lines, the company has become a leader in ternary precursors with global competitiveness.

  Investment points: first coverage, “overweight” grade.

We forecast the company’s net profit for the years 19/20/21 will be 8.



4.9 billion, corresponding to 0 EPS.



33 yuan.

With reference to comparable company assessments, comprehensive PE and PB estimation methods are given to the company 27 times PE in 2019 with a target price of 5.

67 yuan.

  GEM: Leading ternary precursor, a leader in renewable resources.

The company’s overall layout has five major industrial chains: ① the large-cycle industrial chain of used batteries and power batteries, ② the cobalt-nickel-tungsten resource recycling and cemented carbide industrial chain, ③ the electronic recycling industrial chain, ④ the scrap automobile comprehensive utilization industrial chain, ⑤ waste residue, wasteMud, waste water recycling industry chain.

Battery materials are currently the company’s main source of revenue.

  Battery materials business: 1) Since listing, the company has cut into the field of lithium battery materials through multiple acquisitions and self-built production lines.

It has outstanding technical advantages, rapid increase in the capacity of battery materials, and close cooperation with high-quality customers to ensure the full release of production capacity. The company has global competitiveness in the manufacturing of ternary precursors. At present, it has the largest production capacity and output in the country and a global market share of 20%.

2) “Urban Mine + International Giants Cooperation” dual-raw material strategy guarantees the supply of cobalt and nickel resources that are highly dependent on imports in the country; it is proactively planning the field of power battery recycling and seizing the waste recycling market in the manufacturing industry of lithium battery component materials.

  Renewable resources and cobalt-nickel-tungsten and cemented carbide business: 1) Renewable resources: The company lays out seven major electric waste dismantling bases, in-depth optimization and adjustment of the electric waste business; constructs six major scrap car processing centers, and gradually improves the car dismantling system.

2) Cobalt-nickel-tungsten and cemented carbide: Precisely exerting force to create a recycling industry chain.

The company’s ultra-fine cobalt powder has an international and domestic market share of 20% and 50%, respectively; it is developing high-end areas and building a complete life cycle closed-武汉夜生活网loop system of cobalt-nickel-tungsten covering high-end smart tools.

  Risk reminders: sales of new energy vehicles, progress in production capacity operation, supplementary growth progress exceeding expectations, fluctuations in cobalt and nickel prices, etc.