The world's leading lithium resource leader: Tianqi Lithium Industry, founded in 1992, is a Chinese and global leading lithium-centered new energy materials company, listed on the Shenzhen Stock Exchange (SZ.002466) and the Stock Exchange of Hong Kong (9696.HK). The first lithium carbonate plant was built in Shehong, Sichuan Province, marking the beginning of the company's lithium industry. The company's business covers the key stages of the lithium industry chain, including the development of hard rock lithium ore resources, the processing and sales of lithium concentrate and the production and sales of lithium chemical products. The company strategically distributes lithium resources in China, Australia and Chile, and establishes partnerships with international customers with the advantage of vertically integrated global industry chain.
The performance continued to grow: in the first half of 2022, the company achieved 14.17 billion yuan in revenue, an increase of 506.3% over the same period last year, and the net profit attributed to the parent company was 10.23 billion yuan, an increase of 13191% over the same period last year. Among them, the company's lithium concentrate mining and sales business achieved revenue of 4.456 billion yuan, an increase of 417.4% over the same period last year, and sales revenue of lithium compounds and derivatives reached 9.711 billion yuan, an increase of 558.19% over the same period last year. In terms of gross profit margin, the gross profit margin of lithium concentrate business was 77%, an increase of 18.26 percentage points over the same period last year; and that of lithium compounds and derivatives business was 87.41%, an increase of 40.99 percentage points over the same period last year. At the same time, SQM, an associate, achieved substantial growth in its performance in the first half of 2022, and the company recognized a return on investment in SQM of 2.326 billion yuan during the reporting period, a substantial increase over the same period last year.
Capacity expansion: in recent years, with the continuous development of the new energy industry, lithium prices continue to rise.
The company is also actively distributing lithium resources and expanding the production capacity of lithium products. With the completion of the construction of the Greenbush tailings treatment plant at the beginning of 2022, the company currently has a capacity of more than 1.6 million tons of lithium concentrate per year. With the production of the chemical grade plant in the third and fourth phase of Greenbush in the future, lithium mineral energy will be further expanded. At the same time, with the production of the second phase of the Quinana plant and the Anju plant in Sichuan in the future, the company's annual lithium salt production capacity will exceed 110000 tons.
Target price of HK $82.54, first-time coverage and buy rating: based on the rapid expansion of Tianqi lithium mine and lithium products in the next few years and the persistently high prices of lithium ore lithium products, we forecast that the company's 2022-2024 revenue will be 479.39 billion RMB 46135pm 42.851 billion respectively, and the homing net profit will be 203.16182.35pm 16.771 billion respectively. Based on the 2022 earnings forecast, we give the company a target price of HK $82.54, corresponding to 6 times PE in 2022, which is 39.8% higher than the current price, covering and giving a buy rating for the first time.
Risk factors: the risk of fluctuations in the lithium market, the influence of market forces in the lithium industry, and the limited mining life of the Greenbush mine.