Overview of events

1) the company disclosed that the operating income in the first half of 2022 was 2.71 billion yuan, an increase of 98.58% over the same period last year, and the net profit was 1.348 billion yuan, an increase of 643.5% over the same period last year.

2) the company announced that silver-lithium new energy plans to upgrade the first phase of mica lithium extraction production line, with a project investment budget of 128 million yuan.

Analysis and judgment:

The price of 2022H1 lithium salt is high, and its performance is much higher than that of the same period last year. In the first half of 2022, the company achieved operating income of 2.71 billion yuan, an increase of 98.58% over the same period last year, of which the operating income of lithium salt business reached 2.057 billion yuan, an increase of 368% over the same period last year. The sharp increase in the company's revenue during the reporting period was mainly due to a sharp increase in the average sales price of lithium salt compared with the same period last year. According to Baichuan Yingfu data, the average price of lithium carbonate in 2022H1 is 453,000 yuan / ton, which is 45.5% higher than that of 2021H1's 820,000 yuan / ton. During the reporting period, the total profit of the company was 1.565 billion yuan, an increase of 630.83% over the same period last year. The net profit belonging to the parent company was 1.348 billion yuan, an increase of 643.50% over the same period last year. The great improvement in the company's main financial indicators was mainly due to the increase in the price of the selected chemical industry and the increase in gross profit. We expect that under the background of the successful compatible transformation of the company's two lithium mica production lines in the first half of the year, lithium salt production and sales are expected to increase month-on-month in the second half of the year, and the full-year results are expected to benefit from the company's increased lithium production and high prices.

Sitting on high-quality lithium mica resources, Qiankeng "Exploration and Mining" driving Company has 2 mining rights and 5 exploration rights in Yichun area, holding or controlling more than 100 million tons of lithium ore resources. rich in resources and good mining conditions. According to the company announcement, at present, the company has 1.8 million tons of lithium mica mining capacity, of which Shiziling is about 1.2 million tons / year, Xinfang Tantalum and Niobium Mine is about 600,000 tons / year, supporting 1.2 million tons / year mineral processing capacity, of which Yifeng Shiziling Mining area 600,000 tons / year. Taichang Mining Industry 600,000 tons / year. At the same time, the company's Xikeng lithium mine "exploration and conversion" application work is in progress, and plans to build 3 million tons / year mining and separation integrated production capacity to match it, when it is completed and put into production, the company's annual mining capacity will reach 4.8 million tons. Qiankeng "exploration and conversion mining" will greatly improve the company's raw material self-sufficiency rate, which is the internal driving force of the company's growth.

Revamping the production line to improve flexibility, the company announced on July 15 that the compatibility transformation of lithium mica for two production lines for the preparation of lithium carbonate from spodumene (with a total capacity of 15000 tons) has been completed. at present, the above two production lines can use spodumene and spodumene as raw materials to prepare lithium salt, which improves the flexibility of the company's raw material procurement. More fully protect the company's raw material supply. Up to now, the company has a capacity of 30,000 tons of lithium salt and a capacity of 15000 tons under construction. The company announced on April 8 that it intends to invest in a new lithium salt project with an annual production capacity of 20,000 tons. It is expected that the project will be completed and put into production within 24 months after the project is approved and have the conditions to start. At that time, the company's lithium salt production capacity will reach 65,000 tons / year, which will help to make full use of the company's rich lithium mica resources and give full play to economies of scale.

The production line of lithium extraction from mica is to be upgraded, and the production capacity of lithium salt is expected to be increased again.

The company announced on August 18 that its subsidiary Silver Lithium New Energy plans to invest 128 million yuan in the first phase of the mica lithium extraction project, which will not affect the production of the original production line and is expected to be completed by the end of 2022. This transformation can not only effectively reduce energy consumption, but also improve the production capacity of the production line. According to the company announcement, after the completion of this transformation, the production capacity of lithium carbonate prepared from lithium mica of the same grade will be more than doubled. It will help the company to make more full use of its own resources and improve the production capacity of lithium salt, and promote the optimization and upgrading of the integrated industrial chain of lithium ore mining, comprehensive utilization of lithium ore separation and lithium salt deep processing. Enhance the company's profitability and core competitiveness, and promote the sustainable development of the enterprise.

Investment suggestion

At present, the company is mainly two-wheel drive of lithium and motor plates. On the basis of the existing motor business, the company is rapidly expanding lithium plate business and building an integrated industry chain of mining, mineral processing and deep processing. With the vigorous development of new energy vehicles, consumer electronics and energy storage industry in 2022, the demand for lithium salt is growing faster than ever before, while the increase in the global supply of lithium salt is limited. It is expected that the price of lithium resources will continue to rise in the face of extremely tight supply. At present, the company has 1.2 million tons / year lithium mica mineral processing capacity, 15,000 tons / year lithium mica preparation lithium salt production capacity and 15,000 tons / year lithium mica and spodumene compatible lithium salt production capacity of 30,000 tons / year. With the subsequent construction of 15000 tons of lithium salt project, as well as 3 million tons of mining and separation integration and 20,000 tons of lithium salt project put into production Lithium plate performance growth is expected to lead to a big increase in the company's overall performance. In addition, the company is the leader in many market segments in the domestic small and medium-sized motor industry. As the company's motor sector actively develops new markets, the motor sector will provide a guarantee for the company's stable performance growth. We keep our performance forecast unchanged. It is estimated that the company's operating income for 2022-2024 will be 74.84%, 106.85%, 12.268 billion yuan respectively, a year-on-year increase of 150.9%, 42.8%, 14.8%, and net profit of 34.16%, 50.23, 5.470 billion yuan respectively, an increase of 785.4%, 47.0% and 8.9%, respectively. The EPS is 2.94x3.21 yuan per share respectively, corresponding to the closing price of 24.83yuan on August 18, 2022, and the PE is 7.7times that of 12.4amp 8.4max. Maintain a "buy" rating.

Risk hint

1) the price of lithium salt fluctuates sharply

2) the production capacity construction of mining and selection and the transformation and construction of lithium salt production line are not as expected; 3) the exploration and conversion of Xikeng is not as expected.