Event: Tianqi shares released semi-annual report 2022: revenue in the first half of the year was 2.075 billion yuan, an increase of 25.27% over the same period last year; net profit was 161 million yuan (after deducting 132 million yuan), an increase of 107.37% over the same period last year (104.05% after deducting non-profit).

Lithium recycling accumulates abruptly, and its profitability and recovery rate are in the forefront of the industry. Benefiting from the rapid development of new energy vehicle industry and electrochemical energy storage industry, the market demand of lithium battery materials has increased significantly compared with the same period last year. Tianqi Jintai Pavilion, the core subsidiary of the company's lithium battery recycling plate, achieved an operating income of 812 million yuan and a net profit of 213 million yuan. It produced a total of 1451.65 gold tons of cobalt, manganese and nickel in the first half of the year, with an average recovery rate of 98%. The average recovery rate of lithium is more than 85%, and the profitability and recovery level are in the forefront of the industry.

Recovery and reproduction can be improved rapidly, and it is expected to form a processing capacity of 100,000 tons per year next year.

The technical renovation project of Tianqi Jintai Pavilion is expected to be completed and put into production in the third quarter, when the overall treatment capacity will be increased to 50,000 tons / year of waste ternary lithium batteries, the total annual production capacity of cobalt, manganese and nickel is about 12000 gold tons, and the annual output of lithium carbonate is about 5000 tons. In April this year, the company started the construction of a 50,000 ton / year lithium iron phosphate battery environmental protection project, which is expected to be completed and put into production in the second quarter of 23, when it will form a product scale of about 11000 tons / year of iron phosphate and 2500 tons / year of lithium carbonate. It is estimated that in the second quarter of 23, the company will have the treatment capacity of 100,000 tons / year of waste lithium batteries (50,000 tons of ternary and 50,000 tons of iron lithium), and the treatment scale and product scale will be at the leading level in the battery recycling industry.

Acquire 10% stake in Qiantai Technology and actively layout the echelon utilization business. In the first half of the year, Tianqi Recycling, a wholly owned subsidiary of the company, transferred 10% of Qiantai Technology (Shenzhen Shantou) to a consideration of 54 million yuan. Based on the platform of Qiantai Technology (Shenzhen Shantou), the company will further dock and cooperate with Shenzhen Expressway Group to develop new energy vehicle scrapping and lithium battery recycling business. Make full use of Qiantai Technology (Shenzhen Shantou) industrial scale advantages, technological advantages, location advantages and resource advantages of Shenzhen High Speed Group to promote the coordinated development of the company's lithium battery recycling business and promote the company to open up Guangdong-Hong Kong-Macau Greater Bay Area market.

Gather various resources to build battery recycling channels. The company is committed to building a "Internet + recycling" platform for waste lithium electricity, and establishes a nationwide waste lithium battery recycling service network by deeply binding battery enterprises, battery users, recycling enterprises and related financial, science and technology, service companies, etc. to provide raw material guarantee for lithium battery recycling business. Since the end of last year, the company began to sign cooperation agreements with FAW, JD.com, Xingheng Power supply, Haitong Hengxin, Shanxi products, Guangzhou Huasheng and other enterprises.

The business of smart equipment has grown steadily, and the proportion of new energy vehicle orders has increased rapidly. 22H1's intelligent equipment business achieved an operating income of 710 million yuan, an increase of 13.55% over the same period last year, and a gross profit margin of 15.94%, a decrease of 4.10pct over the same period last year. In the first half of the year, the company's automotive intelligent equipment business newly signed orders of 1.003 billion yuan, in-hand orders of 1.096 billion yuan, bulk transport business orders of 287 million yuan. In the first half of the year, new energy vehicles accounted for 59% of the newly signed orders for the company's automotive intelligent equipment business, an increase of 19pct over the same period last year. With the sustained and rapid growth of production and sales of new energy vehicles, the overall demand of the automobile intelligent equipment industry is strong. In the second half of the year, the company will accelerate the implementation and delivery of on-hand orders to promote the smooth production target for the whole year.

Investment suggestion: it is estimated that the net return profit of the company in 2022, 2023, and 2024 will be 3.5pm, 5.3max, 7.00 million, respectively, and the corresponding EPS will be 0.93, 1.39 and 1.84 yuan per share, respectively, and the corresponding PE will be 24x/16x/12x, respectively, maintaining the "recommended" rating.

Risk tips: the risk that the development of the new energy vehicle industry is not as expected; the risk of fluctuations in upstream raw material prices; the risk that the company's lithium recovery capacity releases less than expected risk; the risk that the profitability of other businesses is not as good as expected; the risk of increased competition in the industry.