Keda Group(600499) 民生证券·2024-06-25 05:00Investment Rating - The report maintains a "Recommend" rating for Keda Industrial Group (600499 SH) with a target price of 8 30 RMB [3] Core Views - The lithium battery sector is under pressure due to price volatility and rising costs with lithium carbonate prices dropping below 100 000 RMB/ton on June 18 and a 5 17% decline from early June [3] - Keda's ceramic machinery business is thriving overseas with over 65% of orders coming from international markets in Q1 2024 [3] - Africa remains a key growth region with East Africa expected to see GDP growth increase from 1 5% to 5 7% between 2023 and 2025 [3] - Keda's investment in Blue Horizon Lithium (43 58% stake) continues to generate cash flow but profits are impacted by falling lithium prices and rising production costs [3] Lithium Battery Sector - Lithium carbonate prices have shown significant volatility in 2024 with two major price drops: first to 91 000 RMB/ton in late February and second to 99 000 RMB/ton on June 18 [3] - Domestic lithium carbonate inventory reached a new high of 102 900 tons with weekly production hitting 14 800 tons [3] - Major lithium companies like Tianqi Lithium and Ganfeng Lithium have seen significant stock price declines with Tianqi dropping 44% and Ganfeng dropping 31% from their respective highs [3] Ceramic Machinery - Overseas orders for Keda's ceramic machinery surged in Q1 2024 with international markets accounting for over 65% of total orders [3] - European ceramic companies are focusing on equipment upgrades and cost reductions due to high energy costs and supply chain instability [3] - Global ceramic machinery leader Sacmi achieved 12% revenue growth in 2023 and is expected to continue investing in digitalization alongside Keda [3] African Market Growth - East Africa is projected to be the fastest-growing region in Africa with GDP growth increasing from 1 5% to 5 7% between 2023 and 2025 [3] - Specific country performances include Ghana's Q1 2024 GDP growth of 4 7% and Côte d'Ivoire's projected 2024 GDP growth of 9 5% [3] - Keda has established production lines in seven West and East African countries and two in the Americas [4] Financial Forecasts - Keda's revenue is expected to grow from 9 696 million RMB in 2023 to 16 106 million RMB in 2026 with a CAGR of 16 4% [5][6] - Net profit attributable to shareholders is projected to increase from 1 726 million RMB in 2024 to 2 198 million RMB in 2026 [5][6] - The company's PE ratio is forecasted to decrease from 9x in 2024 to 7x in 2026 indicating improving valuation metrics [5][6] Currency Impact - African currencies have shown mixed performance in 2024 with some like the Kenyan shilling recovering while others like the Ghanaian cedi continue to depreciate [4] - Keda's financial performance is influenced by currency fluctuations particularly due to USD and EUR-denominated debt [4] Strategic Recommendations - Keda is advised to leverage its leading position in ceramic machinery expand its presence in Africa and diversify into new product categories like sanitary ware and glass [4] - The company should continue to develop its lithium battery materials and equipment business to create new growth opportunities [4]