SUNSTONE(SH:603612) Huafu Securities·2024-02-01 16:00Investment Rating - The report assigns a "Buy" rating to the company with a target price of 19.87 CNY per share, based on a total market value of 107 billion CNY [2][8]. Core Viewpoints - The company is the world's largest commercial prebaked anode producer, with a production capacity of 2.82 million tons as of December 31, 2022, and aims to reach a signed capacity of approximately 5 million tons by 2025 [7][14]. - The company is expanding into the anode materials sector for lithium batteries, with a total integrated capacity expected to reach 31.5 thousand tons [2][10]. - The company benefits from lower production costs compared to the industry average, primarily due to large-scale raw material procurement, resource utilization, and lower financing costs [1]. Financial Data and Valuation - The company's revenue for 2022 was 19.401 billion CNY, with a growth rate of 105% compared to 2021. However, a decline of 24% is expected in 2023 [5]. - The net profit forecast for 2023-2025 is 598 million CNY, 884 million CNY, and 990 million CNY, respectively, with corresponding EPS of -1.11, 1.63, and 1.83 CNY per share [2][5]. - The company’s price-to-earnings ratio (P/E) is projected to be 6.0 in 2025, indicating a competitive valuation [5]. Production and Market Position - The company has established five production bases across various regions, including Shandong and Gansu, to align with the industry's trend of "north aluminum moving south" [14][51]. - The company’s prebaked anode production capacity is expected to increase by an average of 600 thousand tons annually during the 14th Five-Year Plan period [14]. - The company has successfully integrated its operations with the acquisition of XinYuan Co., enhancing its production capabilities in the lithium battery anode sector [2][10]. Supply and Demand Dynamics - The current market for prebaked anodes is characterized by an overall surplus, with a utilization rate of around 70%. However, the supply-demand mismatch is significant across different regions [29][90]. - The report indicates that the price of prebaked anodes is primarily driven by raw material costs, with a notable downward trend observed in 2023 [29][56]. Strategic Initiatives - The company is pursuing a dual strategy of expanding its prebaked anode production while simultaneously developing its lithium battery anode business, which is expected to provide new growth momentum [2][10]. - The company is also exploring overseas expansion opportunities, including a joint venture in the UAE to establish a prebaked anode production base [46].