Event: on August 24, the company disclosed the semi-annual report that 2022H1 realized revenue of 1.22 billion yuan, a 4.4-fold increase, and a net profit of 480 million yuan (410 million yuan for lithium + 70 million yuan for chromium), an increase of 10.2 times. On a quarterly basis, Q2 revenue was 870 million yuan, compared with + 861% RMB146%, net profit 340 million yuan, and + 1430% net profit 160%. In the first half of the year, it is expected to sell 6841 tons of lithium concentrate, 198 tons of industrial carbon and 64000 tons of chromite.
The high performance in the first half of the year was mainly due to the rise in volume and price of all products, and the main performance increment contributed by lithium products.
(1) Lithium products: 2022H1 revenue 1.06 billion, accounting for 86.9%, the same increase of 9.6 times, gross profit 94.5%; according to our estimates, lithium concentrate Q1/Q2 sales volume of 2113x4727 tons, the average price of 117,000 yuan / ton, a net profit of 810,000 yuan / ton; industrial carbon Q1 sales volume of 198 tons, an average price of 350,000 yuan / ton, a net profit of 230,000 yuan / ton.
(2) Chromium products: the revenue of 2022H1 is 160 million yuan, accounting for 13.1%, the same increase of 25%, and the gross profit is 72%. According to our estimation, the sales volume of chromite Q1/Q2 is 430,000 tons, the average price is 2200pm 2500 yuan / ton, and the net profit is 1100pm 1300 yuan / ton.
By 2025, the total planned production capacity of lithium salt is nearly 40,000 tons of LCE, with a total planned investment of 6 billion yuan.
2021-2023 plan 2 billion to build 12000 tons of lithium carbonate production line in Zabuye II (9600 tons of electric carbon + 2400 tons of industrial carbon), which is expected to be put into production in September 2023; 2023-2025 plans to invest 2 billion to build 10,000 tons of lithium hydroxide project + the second 10,000 tons of electric carbon project, plus 5400 tons of existing lithium concentrate (equivalent to LCE), the total production capacity of lithium salt is nearly 40,000 tons, supporting energy supply project joint Baowu clean energy project will be carried out simultaneously. The orderly expansion of production capacity provides support for the continued high growth of the company's future performance.
Rising supply constraints, low inventories and high costs support persistently high lithium prices in the second half of the year. The epidemic situation in East China alleviated in the second half of the year, and with the peak consumption season of "Golden Nine Silver Ten", the sales of new energy vehicles may show rapid growth. The Federation expects retail sales of new energy passenger cars in August to be 7.0% compared with + 108.3% month-on-month, and we expect to sell 6.5 million vehicles for the whole year. The profits of the industrial chain were transferred to the resource side, and the cost support, including tax, rose to more than 450000.
We estimate that there is a supply gap of 50,000 tons of LCE in lithium storage this year, the shortage of lithium supply in the second half of the year will be intensified due to the impact of Q3 power cuts and the Qinghai-Tibet epidemic, and it is difficult to solve the tight supply and demand of lithium concentrate in 2023. We are firmly optimistic about the strategic allocation value of lithium resources under the general trend of green energy & electric intelligence.
Investment suggestion: the company plans to expand production steadily, and under the background of high lithium price, future profits are expected to further increase. It is estimated that the return net profit of the company from 2022 to 2024 is 100 million yuan in 10-19-38, which is times that of PE in 27-18-9. Maintain the company's "buy" rating.
Risk hints: the risk of price fluctuation of lithium salt products; the risk of epidemic situation affecting terminal consumer demand; and the risk that the second phase of the project is not as expected when it is landed and put into production.