July 7, the Development and Reform Commission issued a "14th Five-Year Plan" circular on the development of circular economy, which puts forward, by 2025, the main resource output rate than 2020 increased by about 20%, the unit of GDP energy consumption, water consumption than 2020 were reduced by 13.5%, 16% or so, the comprehensive utilization rate of crop residue Comprehensive utilization rate of crop straw will remain above 86%, comprehensive utilization rate of bulk solid waste will reach 60%, comprehensive utilization rate of construction waste will reach 60%, utilization of waste paper will reach 60 million tons, utilization of waste steel will reach 320 million tons, output of renewable non-ferrous metals will reach 20 million tons, of which output of renewable copper, renewable aluminum and renewable lead will reach 4 million tons, 11.5 million tons and 2.9 million tons, and output value of the recycling industry will reach 5 trillion tons, and output value of the recycling industry will reach 5 trillion dollars. Utilization of industrial output value of 5 trillion yuan.
So, 5 trillion yuan output value of the big market, which listed companies in the run? What are the new ways of playing these companies, and how are they doing?
What are the representative enterprises of scrap steel recycling and reuse, and how is the texture?
China is the world's largest producer and consumer of iron and steel, and in 2020 China's crude steel production exceeded the 1 billion tons mark for the first time. However, domestic iron ore resources are relatively scarce, and rely heavily on imports. According to statistics, in 2020, China's cumulative imports of iron ore 1.17 billion tons, the import amount of about 118.94 billion U.S. dollars. Scrap iron and steel is the modern iron and steel industry indispensable iron raw materials, but also the only raw materials can be a large number of alternative iron ore, is energy saving energy-carrying green resources. Compared with iron ore, coke as the main raw material steelmaking process, steelmaking process with scrap as raw material eliminates coking, sintering and ironmaking process, which can effectively save standard coal, water, concentrate powder and other resource consumption, while effectively reducing carbon dioxide and other emissions, wastewater and solid waste emissions, and the iron and steel industry to realize the green development of the role of support.
According to industry insiders, China's current power industry accounted for the largest share of carbon emissions, accounting for 45%, followed by steel accounted for 18%, and the use of scrap steelmaking than with the original ore steelmaking will significantly reduce carbon emissions.
Shares rose 4.96% of the Huahong Technology is one of the representative enterprises of the reuse of waste resources. The business of its renewable resources segment includes the research and development, production and sales of renewable resources processing equipment, as well as renewable resources operation business. The company is a leading professional manufacturer of renewable resources processing equipment and comprehensive service provider, plowing the industry for more than 30 years, in the field of scrap steel, end-of-life car recycling business with first-class technical strength, channel resources and market competitiveness.
Huahong Technology's renewable resources business is mainly focused on scrap steel processing and trading, end-of-life automobile recycling, and the comprehensive utilization of rare earth recycling materials. Holding subsidiaries Donghai Huahong and Qian'an Jili two major scrap steel processing and distribution bases, through the recycling of social scrap steel sorting, crushing, de-emphasis, packing and other specialized processing, can directly for the steel mills to provide high-quality scrap steel furnace material. The company carries out the recycling and dismantling business of scrap motor vehicles through its wholly-owned subsidiary, Beijing Huahong, which has the qualification of scrapping retired military equipment. The company has formed a complete industrial chain from the production of dismantling equipment for end-of-life motor vehicles, to the design of overall solutions for recycling enterprises, and then to the resource utilization of end-of-life motor vehicles.
From the performance point of view, its revenue parent has increased from 1.006 billion in 2016 to the current 3.376 billion, and the net profit of the parent has increased from 63.03 million to the current 225.2 million.
From the point of view of profitability, the gross profit margin of Huahong Science and Technology has fallen from 21.05% in 2019 to 14.23% in 2020, which is already below 20%, of which the gross profit margin of scrap steel and end-of-life automobiles is only 1.22%.
Huahong Technology said in the 2020 annual report, although the company started early in the renewable resources processing equipment industry and prominent position, but in the context of many large and small manufacturers competing to enter the renewable resources processing equipment market, the market competition will be more intense. In the future, as competition continues to intensify, the industry chain gross margin will further decline. This is also a problem faced by many resource recovery and reuse enterprises.
Special stainless steel industry as a sub-sector of the steel industry, the product in addition to excellent material properties, the biggest advantage is that it can be 100% recycled, in line with environmental protection, energy saving, resource conservation national strategy.
Today's share price of Yongxing material is also one of the representative stainless steel recycling enterprises. According to the annual report disclosure, the company to stainless steel scrap as the main raw material, the use of electric furnace smelting, furnace refining, continuous casting or die casting, continuous rolling or forging and other short flow process production of stainless steel bars and wires, the product can be processed downstream into seamless steel pipe, pipe fittings, flanges, shafts, pumps, valves, rods, steel wire, wire mesh, springs, standard parts, welding consumables and other products. In addition, it also has the concept of lithium, lithium new materials business, the main product is battery-grade lithium carbonate, mainly used in the consumer electronics industry, new energy vehicles, energy storage equipment and other fields. However, the company's net profit has been declining for two consecutive years, the gross profit margin is only about 12%.
Rare earth recycling representative of the successive mergers and acquisitions
China's rare earth mineral resources and rare earth industry advantages are obvious, belonging to the country's important strategic resources, but due to the over-exploitation of rare earth resources, not only caused a great waste of resources, but also caused serious pollution of the environment. In recent years, the State has implemented total control over the exploitation of rare earth resources, carried out protective development, and put forward the policy requirement of gradually improving the utilization rate of rare earth resources. Under the market situation where the total amount of resource extraction is under protective control and the market application demand is stable, the development of circular economy and the improvement of the comprehensive utilization rate of resources have become the only feasible mode.
Pictured is a motor part containing rare earths recovered from a hard disk by Hitachi.
Huahong Technology is a newcomer to rare earth recycling. Through the acquisition of Xintai Technology, Huahong Technology will expand the renewable resources business to the comprehensive utilization of rare earth recycling materials, to further enhance the competitiveness of the industry to provide strong support.
Its subsidiary Xin Tai Technology and its subsidiary Jishui Jincheng main business for the comprehensive utilization of rare earth recycling materials, that is, the use of neodymium-iron-boron recycling materials, phosphor waste production of high-purity rare earth oxides; at the same time, Xin Tai Technology, through its wholly owned subsidiary of Hangzhou new materials to carry out the production of rare earth permanent magnetic materials business, to achieve the extension of the industrial chain. The main products of the comprehensive utilization of rare earth recycling materials are high-purity rare earth oxides such as praseodymium oxide, neodymium oxide, praseodymium-neodymium oxide, dysprosium oxide, terbium oxide, europium oxide, gadolinium oxide, holmium oxide and so on, which can be widely used in magnetic materials, computers, telecommunication equipments, tricolor phosphor and other high-tech fields.
Huahong Technology is also running in the rare earth recycling field. 2021 May 5, it has announced plans to acquire Jiangxi Wanhong. Jiangxi Wanhong is mainly engaged in the comprehensive recycling of waste magnetic materials business, through the comprehensive recycling of waste magnetic materials production of rare earth oxides, the current annual treatment of waste magnetic materials 6000 tons. Its announcement that the acquisition of the equity in line with the company's development strategy and business development needs, is conducive to the company to play the advantages of investment and financing, to promote the company to do more, stronger rare earth resources comprehensive utilization of industry, enhance the comprehensive competitiveness of the market. After the completion of the acquisition, Jiangxi Wanhong will be included in the scope of the company's consolidated statements, the equity acquisition will increase the company's asset size and operating income, the company's rare earth resources comprehensive utilization of business capacity will be further enhanced.
Kaiyuan Securities commented in the research report that this further enhances the rare earth recycling capacity, the future is expected to Ganzhou Huazhuo through the joint venture company to make up the front section of the capacity. Through the acquisition of Jiangxi Wanhong, the company's permanent magnet waste recycling capacity of 16,000 tons, rare earth oxide capacity of 5048 tons, through the synergies and expansion, long-term planning capacity still has room for improvement.
Huahong Technology rare earth recycling materials comprehensive utilization of business gross margin last year was only 14.10%, but this has far exceeded the renewable resources operations - scrap steel and scrap car business gross margin, which is also the reason that it is constantly in the field of rare earth recycling mergers and acquisitions.
In addition, the listed company Sheng new lithium energy also said in the annual report, the company's rare earth business is implemented by the subsidiary Wanhong High-tech, through the comprehensive recycling of waste magnetic materials to produce rare earth oxides, the design capacity of the annual treatment of waste magnetic materials for 6,000 tons of products to praseodymium-neodymium oxide, and covers gadolinium oxide, holmium oxide, dysprosium oxide, terbium oxide and other oxides containing rare earth elements, mainly used in permanent magnet materials, catalysts, catalysts, and other rare earth elements, mainly used for the production of rare earth oxides.
Power Battery Recycling: Who's Laying the Groundwork for a 100 Billion Dollar Market? What are the business models?
With the rapid development of the new energy automobile industry, there will be a lot of retired batteries, if this part of the retired batteries inappropriate will bring serious environmental pollution. According to the data from China Automotive Technology Research Center, in 2020, China's new energy vehicle ownership has reached 4.92 million, with a cumulative total of 200,000 tons of decommissioned power batteries (about 25GWh). 2025, China's waste battery capacity to be recycled will reach 137.4GWh, more than five times the 2020 level. It is predicted that, taking into account the exponential growth in the amount of retired batteries in the future, by 2030, the power battery recycling market size will be more than 100 billion yuan. 2021 government report clearly pointed out that "accelerate the construction of power battery recycling system". As the national level of power battery recycling industry attaches great importance to the construction of power battery recycling system will press the "accelerator button", the market will also show a broad prospect.
Everbright Securities also pointed out in the research report, by 2030, ternary and lithium iron phosphate battery recycling will become a 100 billion market; for ternary batteries, through the material recycling method, can have a certain economy, the market will take the lead in the amount of 2022-2023 will be the industry's important inflection point, the estimated 2019 ternary cathode 0.13 million tons, followed by year-on-year incremental increase to 292,500 tons in 2030; in the existing power battery recycling system, the market will also show a broad prospect. It is estimated that 0.13 million tons of ternary anode can be recovered in 2019, and then increase year by year to 292,500 tons in 2030.
Everbright Securities said in a research report, according to the existing business model dominated by the different nature of the enterprise, China's power battery recycling market has spawned a power battery enterprise recycling business model, lithium materials enterprise recycling business model. (1) Power battery enterprise recycling mode, improve the upstream bargaining power of raw materials, reduce battery costs, domestic representative enterprises are Ningde Times, BYD, Guoxuan Gaoke, etc.. (2) Lithium material enterprise recycling mode, recycling key metal resources, forming an industrial closed loop and cost reduction space. Many ternary precursor companies have a layout in the field of power battery recycling, such as Grimmie, Bump Cycle (a subsidiary of Ningde Times), Huayou Cobalt, Xiamen Tungsten Holdings Ganzhou Haopeng, Zhongwei, Ganfeng Lithium and so on.
Today's shares stopped Green America is one of the representative enterprises of power battery recycling. Its annual report, the company through key technological innovation and quality first strategy, completed the "waste recycling - resource regeneration - product recycling - alternative to the original mineral resource products - the world's brand products". Through key technological innovation and quality-prioritized strategy, the company has completed the brand building road of recycled products, and its core products have fully entered the ranks of world quality brands. The use of high-tech recycling of high-quality products to maximize the added value of recycled products.
The company has a unique profit model compared to other new energy materials manufacturing enterprises and resource recycling enterprises. The company's ternary precursor products occupy the two core processes of chemical raw material system and material synthesis, with an average gross margin of 24%, higher than the industry average, which is where Grimme's strength lies.
Compared to industry peers, Grimme's "recycling system + wet chemical system + environmental governance system" has an advantage. In the field of ternary precursor and tricobalt tetraoxide products, the company has 20 years of wet chemical technology heritage, the establishment of a complete "chemical raw materials system + precursor manufacturing system", through the waste recycling to the material remanufacturing of the whole industry chain, through the waste recycling of the two veins.
From the performance point of view, affected by the epidemic, Grimmie's revenue and net profit last year declined year-on-year, the company's comprehensive gross profit margin in 2020 was 16.66%, 21.02% in the first quarter of this year. Its accounts receivable balance exceeded 3 billion in the first quarter of this year, at 3.413 billion, an increase of 34.05% from the beginning of the period.
Shares jumped 7.23% Tianqi shares involved in battery recycling.
Tianqi shares of the automotive after-market business covers end-of-life automobile recycling and dismantling, automotive core parts and components remanufacturing and power battery recycling resource utilization. Tianqi shares in the annual report, said in the field of battery recycling, the company has in the reporting period to acquire 99% of the equity of Jintaige. Jintaige is a high-tech enterprise focusing on waste lithium-ion battery recycling, treatment and resource utilization, and its main products are cobalt oxide, cobalt hydroxide, cobalt sulfate and nickel sulfate. Tianqi Lithium, a wholly-owned subsidiary of the Company, is mainly engaged in the production, processing and sale of lithium carbonate. During the reporting period, the market price of lithium metal continued to rise, the market demand for lithium carbonate continued to rise, Tianqi Lithium was positively impacted by market factors, and profitability was further improved.
As far as the business model is concerned, according to the annual report of Tianqi, last year, Tianqi lithium and Jintaige continued to play a synergistic effect, comprehensively improve the level of technology, improve profitability, and further consolidate the company's industrial layout in the field of battery recycling. The company's automotive aftermarket business gross profit margin of 22.44%.
From the gross profit margins of many companies can be seen, more than 20% of the gross profit margin has been a leading level, which means that the money in the field of resource recycling and reuse is not very good, so many companies are looking for new areas to make money as well as a new profit model, and the gross profit margin can be seen as the layout of the enterprise's business and the business model of whether the competitiveness of the big indicators.
Edited by Yue Cai Zhou and proofread by Yan Jun Zhang