Incident Overview
On April 29, the company released its 2021 annual report. During the reporting period, the company achieved operating income of 2,982 million yuan, an increase of 61.73% over the previous year; net profit attributable to shareholders of listed companies was 386 million yuan, an increase of 2592.71% over the previous year; net profit attributable to shareholders of listed companies after deducting non-recurring profit and loss was 363 million yuan, turning a loss over the previous year into a profit.
On April 29, the company released its report for the first quarter of 2022. During the reporting period, the company achieved operating income of 1,355 million yuan, an increase of 152.57% over the previous year; net profit attributable to shareholders of listed companies was 666 million yuan, an increase of 809.81% over the previous year; net profit attributable to shareholders of listed companies after deducting non-recurring profit and loss was 664 million yuan, an increase of 1,09.92% over the previous year.
Analytical judgment:
Litemica is rich in resource reserves, and follow-up plans are being developed in an orderly manner
Since 2010, the company has successively acquired several lithium ore resources. According to the company announcement, the company currently has 2 mining rights and 5 prospecting rights for lithium porcelain ore mines in the Yichun region. The total amount of lithium ore resources it holds or controls is over 100 million tons, with large resource reserves. According to the company announcement, the company currently has a lithium mica mining capacity of about 1.8 million tons/year, including about 1.2 million tons/year at Shiziling and 600,000 tons/year at the Xinfang Tantalum-Niobium Mine. The corresponding litemica beneficiation scale is 1.2 million tons/year, including 600,000 tons/year beneficiation capacity of the Shiziling mining area of Yifeng and 600,000 tons/year of Taichang Mining. According to the company's announcement plan, (1) in the short term: it is necessary to speed up the “exploration and mining” progress of Qiankeng and develop planned mining capacity; expand production in Shiziling; and continuously improve the lithium extraction rate throughout the process from raw ore to lithium salt. (2) Mid-term: Accelerate the “exploration and mining” of prospecting rights at 4 locations other than Qiankeng (Yifeng County Archway lithium porcelain mine, Yifeng County Meijia lithium porcelain mine, Baishuidong in Yifeng County - Yeweiling in Fengxin County, and tantalum-niobium mine in Pingtouling County in Fengxin County). The company makes full use of the advantages of its own lithium ore resources. Through comprehensive application of lithium ore mining and deep processing of limonite, the company can effectively guarantee the supply of the main raw materials for lithium carbonate preparation by the company. At the same time, through large-scale production, the company can effectively reduce production costs and improve the market competitiveness of the company's lithium carbonate products.
Leveraging the resource advantages of lithium-mica, lithium salt production capacity has been steadily increased
According to the company announcement, the company currently has two lithium-mica production lines with a total annual production capacity of 15,000 tons of lithium carbonate. They are mainly processed into lithium carbonate products through the use of limonite materials selected by the company and outsourced accessories. In addition, the company also has a production line using spodumene to prepare lithium carbonate with an annual production capacity of 15,000 tons and a lithium hydroxide production line with an annual production capacity of 10,000 tons of spodumene and a production line of 50,000 tons of lithium carbonate under construction to process lithium carbonate products through the use of outsourced spodumene concentrates and accessories. According to the company's announcement, it is necessary to complete the compatible transformation of the spodumene lithium production line by the second quarter of 2022, so that it can not only extract lithium from spodumene but also extract lithium from spodumene, expand the production and sales of the company's lithium carbonate products, and enhance the company's profitability. On April 8, 2022, the company announced that in order to undertake and support the development and planning of the “Qiankeng Exploration and Mining” project, it plans to invest with Jiangte Mining, a wholly-owned subsidiary, to build a lithium ore mining project of 3 million tons per year and a lithium salt production of 20,000 tons per year. The total investment of the project is about 2 billion yuan. After the completion of the project, the company's lithium salt production capacity will be further expanded to 65,000 tons/year, which will also help the company make full use of its own resource advantages and enhance the company's competitiveness in the lithium salt market.
Performance improved significantly in 2021, and continued growth can be expected in the future.
In 2021, the company achieved operating income of 2,982 million yuan, an increase of 61.73% over the previous year; net profit attributable to shareholders of listed companies was 386 million yuan, an increase of 2592.71% over the previous year. The sharp increase in revenue was mainly due to the continued improvement in the external environment of the lithium salt business during the reporting period, the increase in downstream demand for lithium carbonate products, and a significant increase in sales prices over the same period last year. Through the release and expansion of the company's lithium carbonate collection and lithium carbonate production capacity, the company's lithium carbonate product production and revenue increased significantly over the same period last year. The main reason for the increase in profit was due to the rise in the price of selected chemicals and the sharp increase in gross profit. 2022Q1 achieved operating income of 1,355 million yuan, an increase of 152.57% over the previous year; net profit attributable to shareholders of listed companies was 666 million yuan, an increase of 809.81% over the previous year. The sharp increase in revenue was mainly due to a sharp rise in the quantity and price of the company's selected chemicals. At the same time, the price of selected chemicals rose, and the increase in gross profit helped profits soar. Following the release of the company's lithium salt production capacity, production is expected to continue to grow steadily. At that time, the performance of the lithium salt business is expected to continue to rise while the lithium salt industry maintains a high level of prosperity, and the company's future performance can be expected to grow.
Investment advice
Currently, the company is mainly developing the lithium sector and the motor sector. While rapidly expanding the lithium business, the company is actively expanding the motor business. In 2022, along with the development of the new energy vehicles, consumer electronics and energy storage industries, demand for lithium salt continued to grow rapidly. There was no significant increase in new global supply. It is expected that lithium resource prices will continue to rise. The company currently has a lithium salt production capacity of 1.2 million tons/year for limonite processing, 15,000 tons/year for lithium carbonate preparation from lithium-mica, and a lithium carbonate production capacity of 15,000 tons/year for lithium carbonate prepared from lithium-mica. As subsequent procurement projects are implemented and lithium salt projects are put into operation one after another, the lithium sector will bring greater performance growth to the company. The company is a leading enterprise in many market segments in the domestic small and medium-sized motor industry. As the company's motor sector actively expands new markets, the motor sector will guarantee a steady growth in the company's performance. We expect the company's revenue in 2022-2024 to be 74.84/106.85/12.268 billion yuan respectively, an increase of 150.9%/42.8%/14.8% over the previous year; the net profit of the mother is 34.16/50.23/5.470 billion yuan respectively, up respectively
785.4%/47.0%/8.9%; EPS was 2.00/2.94/3.21 per share, respectively, corresponding to the closing price of 19.47 yuan on April 28, 2022, and PE 9.73/6.61/6.07 times, respectively. First coverage, giving a “buy” rating.
Risk warning
1. The price of lithium salt has dropped dramatically;
2. The construction of lithium salt business fell short of expectations;
3. The construction of the Qiankeng project fell short of expectations.