Event: the company issued a half-year performance forecast for 2022, which is expected to achieve a net profit of 5.3-630 million yuan, an increase of 4080.57%, 4869.36% over the same period last year. Among them, the net profit in the second quarter was 2.8-380 million yuan, with a median of 330 million yuan, an increase of 28% over the previous quarter.

The effective output of lithium salt in concentrate, affected by the epidemic and the fluctuation of lithium price in the early stage, Q2 was sellable, and the performance release in the second half of the year benefited from the high prosperity of the new energy automobile industry, and the revenue and profits of the company's three main businesses, namely, lithium concentrate, lithium salt and lithium electricity equipment, all increased significantly. The company's methyl card mining area ended its winter break on March 8 to resume production, and Chengdu Rongjie Phase I lithium salt production capacity was officially put into production and gradually released, forming an effective concentrate and lithium salt output. However, under the influence of the epidemic, the downstream market demand fluctuated in the second quarter, and considering the short-term decline in lithium prices in May, the company may be reluctant to sell. On the other hand, the sales of new energy vehicles have recovered rapidly, the production of batteries and mid-stream materials continues to rise, and there is almost no faster-than-expected increase in the short-term release of lithium salt in the upstream. Supply and demand determine that the high lithium price continues to exceed expectations, and lithium prices may rise further in the second half of the year. If the company's concentrate lithium salt sales are released in the second half of the year, the performance may be obvious with output and price.

Chengdu Rongjie 20,000 t / a lithium salt project was officially put into production in July, and its production capacity was released. It is expected that Chengdu Rongjie's first phase of 20,000 t / a lithium salt project has entered the trial production phase since January, with good equipment operation and stable product quality. It obtained the "Safety production license" on June 7 and entered the formal production stage in July. The second phase of the 20,000-ton project is expected to match the pace of expansion. With the release of production capacity, performance growth can be expected.

Yuanyangba 2.5 million tons cleaning project is under way, the long-term lithium concentrate production capacity may reach 470,000 tons / year, the existing annual mining capacity of 1.05 million tons + 450000 tons of mineral processing capacity, concentrate production capacity of about 70-80,000 tons; Yuanyangba 2.5 million tons mineral processing project is actively under progress, waiting for the upper planning Kang-Yan industrial concentration area environmental assessment landing, can be declared into the process, the project is expected to be put into production in 23Q2, corresponding to lithium concentrate can be expanded to 190,000 tons / year Taking into account the future government coordination of raw mines or companies are expected to apply for mining capacity expansion to match mining capacity, 2.5 million tons of mining capacity corresponding to lithium concentrate capacity may reach 470000 tons, equivalent to more than 10,000 tons of LCE6.

Investment suggestion: the company has superior lithium resource endowment, orderly expansion of lithium smelting capacity for integrated lithium mining and separation, and high performance release of tight supply and demand lithium prices, maintaining annual return net profit of 20.37 yuan per annum in 22-23-24, respectively, corresponding to the current market capitalization PE of 19-13-9, and maintaining a "buy" rating.

Risk hints: political policy risks; capacity expansion and product development are not as expected; the development of new energy vehicles is not as expected; disruptive breakthroughs have occurred in related technologies; and product prices have fallen more than expected.