Incident: The company released its performance forecast for the first three quarters of 2022. In the first three quarters of 2022, the company achieved net profit of 152-169 billion yuan, an increase of 2768.96% - 3089.83% over the previous year; net profit after deducting non-return net profit was 142-15.8 billion yuan, an increase of 11747.89%-13060.33% over the previous year. Among them, in the third quarter of 2022, the company achieved net profit of 5-6.5 billion yuan, an increase of 1026.10%-1363.92% over the previous year, and achieved net profit of 4.98-6.48 billion yuan after deduction, an increase of 3625.46%-4687.34% over the previous year.
Due to the impact of non-recurring revenue, the company's third quarterly report performance declined month-on-month. In 2021Q4-2022Q3, the company's net profit for a single quarter was 1,549 billion yuan, 3.328 billion yuan, 7.00 billion yuan, and 5.750 billion yuan, respectively (22Q3 is the median of the forecast range). 2022Q3's net profit declined from Q2 to Q2. The main reason was that SES, a shareholder of Q2, was listed on the New York Stock Exchange. The company's investment changed from long-term equity investment to investment income generated by investment in other equity instruments, generating non-recurring income of 1,207 billion yuan. At the same time, H1's investment income in the joint venture SQM reached 2,326 billion yuan in 2022. After excluding the influence of the above factors, the company's performance in 2022Q3 continued to improve compared to Q2.
The lithium salt business continued to expand, driving a year-on-year increase in the company's performance. The company's significant increase in profit in 2022Q3 was mainly due to rising lithium salt prices and increased lithium salt production and sales volume. According to SMM data, 2022Q3, the average tax-inclusive price of battery-grade lithium hydroxide was 482,600 yuan/ton, an increase of 289.87% over the previous year. Sales of new energy vehicles continued to be booming in the third quarter. Increased demand for lithium salt was compounded by supply rigidity, and lithium prices rose at a high level. 2022Q3, the production capacity of the Quinana Phase I project has climbed, and the company's lithium salt production and sales volume has increased steadily. The volume and price of lithium salt projects have risen sharply, driving the company's performance to grow rapidly.
The mine side is rich in resource reserves, and the expansion of production on the smelting side is progressing steadily. Resource side: Tyllison, a holding subsidiary of the company, is the world's largest lithium mining operator. It currently has a production capacity of 1.62 million tons/year, and the long-term planned production capacity exceeds 2.1 million tons/year. Smelting side: The company currently has a production capacity of 68,800 tons of various lithium chemicals. In the company's mid-term plan, the total production capacity of various lithium chemicals exceeds 110,000 tons/year. Production capacity on the resource side and smelting side continues to expand, injecting strong impetus into improving the company's performance.
Profit forecasts and investment recommendations: In the context of expectations that global lithium salt prices will continue to be high. Relying on Thalyson's high-quality mine-side supply, the company's lithium salt production capacity is rapidly expanding, and the release of lithium salt production is in line with the high lithium price. The company's performance growth is expected to continue to enjoy the dividends of rising volume and price in the lithium salt sector. Considering the possibility of a further increase in raw material costs, we adjusted the company's profit forecast. We expect the company's net profit to be 208.01, 237.93, and 24.129 billion yuan respectively in 2022-2024, and EPS of 1,408, 16.11, and 16.34 yuan respectively. The corresponding PE at the closing price on October 14 is 7.2, 6.3, and 6.2 times, respectively, maintaining the “prudent increase in holdings” rating.
Risk warning: The volume of new energy vehicles falls short of expectations, project construction progress is lagging behind, lithium salt prices have fluctuated greatly, etc.