Keda Group(SH:600499) Soochow Securities·2024-06-19 07:00Investment Rating - The report assigns a "Buy" rating for Keda Manufacturing, marking the first coverage of the company [1]. Core Views - Keda Manufacturing is a global leader in ceramic machinery, with growth driven by its overseas building materials strategy and the expansion of its lithium battery materials business [1][18]. - The company has experienced significant revenue growth from 2016 to 2022, with a compound annual growth rate (CAGR) of 16.9% in total revenue and 55.3% in net profit attributable to shareholders [1][22]. - The report highlights the potential of the African market, where urbanization is accelerating and demand for ceramic tiles is expected to grow significantly [1][18]. Summary by Sections Company Overview - Keda Manufacturing has evolved from a ceramic machinery manufacturer to a comprehensive service provider, expanding its business into overseas building materials and lithium battery materials [1][11]. - The company has established production bases in five African countries and aims to achieve a revenue structure of 80% from building ceramics, 5% from sanitary ware, and 15% from building glass within five years [1][18]. Financial Performance - The company reported total revenue of 9.696 billion yuan in 2023, a decrease of 13.1% year-on-year, and a net profit of 2.092 billion yuan, down 50.8% year-on-year [1][25]. - The mechanical products segment saw a revenue decline of 20% in 2023, while the overseas building materials segment grew by 12% [1][25]. Market Strategy - Keda Manufacturing is focusing on a "Big Building Materials" strategy to capitalize on the growing demand in Africa, with projected tile consumption in Africa expected to reach 1.49 billion square meters by 2025 [1][18]. - The company has leveraged its advantages in channels, production, technology, and localized management to enhance its overseas building materials business, which has seen a CAGR of 87.8% from 2017 to 2023 [1][18]. Lithium Battery Materials - The company has developed a competitive edge in lithium battery anode materials, with a significant increase in sales volume, although revenue has decreased due to price declines [1][18]. - Keda's investment in Blue Lithium Industry is expected to continue providing positive investment returns despite fluctuations in lithium carbonate prices [1][18].