1H22 performance is in line with our expectations
The company announced that the 1H22 performance is in line with our expectations: operating income 1.221 billion yuan, year-on-year + 439.2%; return to the mother net profit 475 million yuan, year-on-year + 1018.3%; deduction of non-net profit 470 million yuan, year-on-year + 991.6%. 2Q22 operating income 868 million yuan, year-on-year + 861.4%, month-on-month + 146.0%; return to the mother net profit 343 million yuan, year-on-year + 1430.4%, month-on-month + 160.0%; deduction of non-net profit 344 million yuan, year-on-year + 1413.6%, month-on-month + 173.0%.
First, the company increased the sales of lithium salt products in the first half of the year. In 2021, the company promoted the process improvement of the first phase of the Zabuye Salt Lake project, and the capacity utilization rate was greatly improved, providing lithium concentrate inventory for sales in the first half of this year. At the end of 2021, the company's lithium concentrate inventory was 11300 tons. In the first half of 2022, the company sold 6841 tons of lithium concentrate, of which 2113 tons were sold in the first quarter and 4728 tons in the second quarter. Second, the price of lithium salt products continues to rise. According to the Asian Metal Network, the average price of electric carbon in the first half of 2022 was 448,000 yuan / ton, + 449% from the same period last year. During the reporting period, the sales price of the company's lithium concentrate products increased with reference to the market price of lithium salt.
Trend of development
The production capacity growth plan is clear, and the development of Zabuye Salt Lake is promising. The company plans to achieve a lithium production capacity of 30,000 to 50,000 tons by the end of 2025, and we expect lithium carbonate production in Zabuye Salt Lake to continue to grow.
From the planning schedule, first, from 2021 to 2023, the planned lithium carbonate capacity of 10,000 tons of battery-grade lithium carbonate project is 12000 tons, and the company is expected to put into production in September 2023. Second, from 2023 to 2025, the company plans to invest 2 billion yuan in the construction of 10,000-ton lithium hydroxide project and the second 10,000-ton battery-grade lithium carbonate project to further increase the company's total lithium production capacity and promote the diversification of lithium products.
The 10,000-ton lithium carbonate energy supply project progressed smoothly and Baowu clean energy won the bid. The company announced on June 22 that it had terminated the energy supply contract with the State Power Investment Tibet Company, and was actively looking for an alternative to the energy supply of 10,000 tons of battery-grade lithium carbonate project. On July 26, the company announced that the winning bidder for the energy supply project was Baowu Clean Energy Co., Ltd., with an electricity price of 0.998 yuan per kilowatt-hour. We believe that the company's efficient completion of the re-bidding of the matching energy supply project reflects Baowu Group's omni-directional support for the company's development after it takes ownership, which is conducive to the smooth progress of the 10,000-ton lithium carbonate project. reduce the impact of lagging energy supply on project production.
Profit forecast and valuation
Taking into account the sharp upward price of lithium salt market to drive the company's performance growth, we raised 2022 Universe's 2023 net profit 196.7% Universe 34.8% to 1.041 billion yuan / 1.235 billion yuan. The current share price corresponds to 26.2 times 2022 / 2023 / 22.1 times earnings. To maintain the outperform industry rating, considering that the current lithium price is high or does not have long-term sustainability, we raise the target price by 22.7% to 57.90 yuan, corresponding to 29.0 times 2022 price-to-earnings ratio and 24.4 times 2023 price-to-earnings ratio, which has 10.6% upside space compared to the current stock price.
Risk.
The construction of lithium carbonate project is lower than expected; the integration of salt lake in Tibet is lower than expected; the price of lithium is down.