Incident: The company issued an announcement. The company's subsidiary Zhejiang Jinhengwang Lithium Co., Ltd. requested agent representatives (Zhang Xiao, Li Tingwei) to jointly establish COPELIA LITIO S.A (Huihuang Lithium). According to the negotiation results, Huihuang Lithium signed an “Asset Purchase Agreement” with Goldinka Energy SA to purchase Goldinka's Laguna Caro mining rights under Goldinka's name for 27 million US dollars, and finally transferred Huihuang Lithium's shares to Jin Hengwang according to Jin Hengwang's instructions.
Comment:
With the acquisition of Salt Lake in Argentina, lithium resource reserves have reached a new level. Argentina's salt lake project is progressing rapidly. As of July 14, the company has completed the preliminary screening of more than 70 salt lakes in Argentina and selected 14 salt lake projects in Catamarca province. On July 18, the company purchased the Laguna Caro mine rights under Goldinka's name for 27 million dollars. The total area was 4,514 hectares. According to preliminary estimates, the lithium resource content of the mine was 50-1 million tons.
The strategic transformation of lithium resources and the Qiancuo Salt Lake Project have begun, driving the company to take off again.
The company started with the building materials business, transformed into the environmental hazardous waste industry in 2015, and began a strategic transformation of the new energy industry in 2021. Following the company's repositioning of its development strategy, the business that will mainly contribute to future profits will be the new energy materials business. The company will build an “upstream mining, downstream recycling, dual-wheel drive strategy” operation model around the lithium carbonate business to achieve an integrated layout of lithium resource development and recycling. Since September 2021, the proposed acquisition of Lithium Source Mining and Salt Lake, a subsidiary of Chenyu Mining, has been completed. Among them, Lithium Source Mining's Baqancuo Salt Lake project has been settled. According to the company's official website, the first batch of 3 electrochemical decontamination devices of the Diqiancuo project successfully produced lithium-rich liquid on May 20, 2022. They have been running steadily for more than 30 days, and have produced qualified lithium carbonate products.
Investment advice: We expect the company's revenue in 2022-2024 to be 76.7/88.7/9.33 billion yuan respectively, with a year-on-year growth rate of -12.2%/5.9%/5.1%. Guimu's net profit was 45/ 1,46/ 1.72 billion yuan respectively, up 416%/220%/18% year-on-year. EPS is 0.6/1.87/2.21 yuan, and the current stock price corresponding to PE is 33/10/9. It was given 15 times the valuation in 2023, corresponding to a market value of 21.9 billion yuan, corresponding to a stock price of 28 yuan. It was covered for the first time and given a “recommended” rating.
Risk warning: The release of the company's salt lake production capacity fell short of expectations; downstream demand fell short of expectations.