Company summary: Nirvana reborn lithium mica mining and metallurgy integration leader. The company was restructured from Yichun Motor Factory in 1991 and listed in 2007. It is mainly engaged in the integrated production of lithium mica mining and metallurgy and the production and sales of special motors. It is the enterprise with the largest lithium ore reserves and the largest lithium extraction capacity of lithium mica. Zhu Jun and Lu Shunmin act in unison as the actual controller of the company, and the state-owned assets of Yuanzhou District of Yichun City are the two shareholders. Lithium plate business fell sharply in 2018 and 2019 due to huge losses in the new energy vehicle business and the fall in lithium prices.
The motor business grew steadily in 2021, and the rise in volume and price of lithium business contributed to the reversal of performance.
Lithium business: market recovery Nirvana rebirth. Industry: lithium salt gap increased: in 2021, supply 501000 tons (+ 22.5%), demand 562000 tons (+ 44%), of which electric car demand 306000 tons (+ 80%) accounted for 54.4%, a shortfall of 60,000 tons; 2022 demand 752000 tons (+ 34%), of which electric car demand 459000 tons (+ 50%) accounted for 61%, a shortfall of 84000 tons. China's lithium mines are highly dependent on Australia and are in severe shortage. In 2020, China produced 260000 tons of lithium salt, only 80,000 tons of self-produced resources, and the resource self-sufficiency rate was only 31%. The rest depended on imports, accounting for 94% from Australia. The supply of lithium ore has contracted in the past three years and there is a good chance that there will be no new capacity in the next three years, but the capacity of lithium salt smelting has expanded rapidly. This year, the shortage of lithium ore has led to the closure of some lithium salt plants and the price of lithium ore has reached an all-time high, and the shortage of lithium ore will continue to enlarge in the next three years. The price increase of lithium salt and lithium ore is more certain. We expect the price of lithium salt to rise steadily this year and next, and the price of lithium carbonate is expected to be 9 and 11 (10,000 yuan / ton) respectively, of which lithium ore is the biggest deficiency, and the price is expected to continue to rise sharply. Company:
The resource grade is high, the reserves are large and the storage space is large. The company is located in Yichun, the capital of lithium in China. By the end of 2020, the company has 2 mining rights and 5 exploration rights in lithium porcelain mines, and the total lithium ore resources held or controlled are more than 100 million tons, ranking first in domestic lithium ore (pyroxene + mica). The grade of Li2O is more than 0.55%, which is much higher than the 0.38% grade which is common in Yichun area. Resource selection is expanding rapidly. At present, the mining certificate is 1.3 million tons of raw ore / year (Shiziling 120 + Xinfang 10); mineral processing is 950000 tons / year (Shiziling 60 + Xinfang 35). The output of lepidolite concentrate in 2018, 2019 and 2020 was 0.5, 0.5 and 10,000 tons, respectively. The company is actively engaged in "exploration and conversion mining". We predict that the output of lithium ore in 2021, 2022 and 2023 will be 1, 1.5 and 4 (10,000 tons) respectively. The scale of lithium salt smelting is large. All adopted sodium potassium sulfate method and rotary kiln process, the annual output of lithium carbonate has been 35000 tons (mica line 1.5 + pyroxene line 2) and the annual production line of lithium hydroxide (pyroxene line) has been completed at the end of the year. The output of lithium carbonate in 2017, 2018 and 2019 was 0.14, 0.7 and 1.24 (10,000 tons), respectively. After continuous improvement of the process, the cost continues to decline. We predict that lithium salt production in 2021, 2022 and 2023 will be 2, 3 and 4.5 (10,000 tons), respectively. Because the self-sufficiency rate of resources is as high as 89%, the profit is sustainable.
Motor business: steady volume growth. The company focuses on special motors, in which wind power supporting motors, construction motors and servo motors have a market share of 60%, 40% and 10% respectively, all of which occupy a leading position in China.
Profit forecast, valuation and investment rating: we expect the company's revenue from 2021 to 2023 to be 3.4145101plus 7.139 billion yuan, respectively, and the net profit attributable to the parent company is 5.02 billion yuan, with a year-on-year growth rate of 3400%, 165% and 57.3%, respectively, compared with a year-on-year growth rate of 3400%, 165% and 57.3%, respectively. The earnings per share are 0.29 pound 0.78 pound 1.22 yuan respectively. Corresponding to the latest closing price of 22.78 yuan per share on August 10, 2021, PE is twice as much as 77-29-19. With reference to the average PE valuation of the lithium industry in 2021, combined with the average PE valuation of Ganfeng Lithium and Yongxing Materials in 2021, the company enjoys a certain resource premium, and we value the lithium business at 160x PE; with reference to Wolong Motor's 2021 PE valuation, we value the motor business at 20 times, with a comprehensive target price of 30.98yuan per share, with 32% room for growth, covering it for the first time and giving it a "strong push" rating.
Risk tips: poor progress of the Xikeng project, falling lithium prices and poor corporate governance.