This report is read as follows:
The environmental assessment of the park belonging to the company's concentrator has been made public, and the expansion of production is expected, which will bring growth space for the company.
Main points of investment:
Maintain the "overweight" rating. According to the third quarter report of 2022, the company realized operating income of 1.682 billion yuan (year-on-year + 209%) and net profit of 1.255 billion yuan (+ 4533%) in the first three quarters, of which Q3 realized operating income of 695 million yuan (year-on-year + 231%, month-on-month + 37%) and net profit of 679 million yuan (year-on-year + 4611%, month-on-month + 108%).
The performance exceeded expectations. According to the upward trend of lithium price in 2022 and the adjustment of the company's project schedule, it is predicted that the company's EPS in 2022, 2023, and 2024 will be 7.94, 8.64, 14.43 respectively (the original 6.62, 10.17, 13.33). Maintain the target price of 172.12 yuan and maintain the "overweight" rating.
The price of Q3 lithium is basically the same as the previous month, and the company's self-supporting lithium ore helps improve its performance. According to the quotation on the SMM website, the price of Q3 lithium is 482,000 yuan / ton (+ 2% compared with the previous month). The supply of the company's Q3 lithium mine has increased significantly, the associated enterprises in the lithium salt business have made substantial profits, and the company has confirmed a substantial increase in investment income.
The winter break of the mine affects the performance of H1, and the performance of Q4 lithium price is expected to grow again. Due to the influence of the winter break of the mine, the production time in the first half of the year is only 3 months. In the second half of the year, the mine production cycle is long, the process is improved, superimposed by the rising price of Q4 lithium, the performance is expected to grow further.
The environmental assessment of the park has been made public, and the concentrator can expand production. On September 9, the official website of the Economic and Information Bureau of Ganzi Prefecture issued a public announcement before the approval of the EIA report of Kang-Kai Industrial concentration Zone in Ganzi Prefecture, which is an important part of the company's mineral processing expansion from the current 450,000 tons / year to 2.5 million tons / year. At present, the examination and approval procedures of EIA are still in steady progress. The future 2.5 million tons / year mining capacity will correspond to the annual volume of 60,000 tons of LCE, and the company will grow greatly in the future.
Risk hint: the progress of the project EIA has been delayed and the demand for electric vehicles is lower than expected.