Event: Tianqi shares announced that the company intends to jointly invest with Honeycomb Energy to set up a joint venture company, and take the joint venture company as the main body to build a hydrometallurgical project for the recycling of waste lithium iron phosphate batteries in Shangrao, Jiangxi Province. the production capacity is 5000 tons of lithium carbonate and 20,000 tons of iron phosphate per year. Tianqi owns 49% of the joint venture and Honeycomb holds 51%.
Lithium battery recycling capacity continues to increase, and honeycomb energy cooperation to enhance core competitiveness. Honeycomb Energy is a professional provider of lithium-ion battery systems. At present, the installed capacity of honeycomb energy-powered batteries ranks sixth in China and 10th in the world. It plans to meet its global capacity target of 600GWh by 2025, accounting for 25 per cent of the global market share.
Previously, the company planned to form an annual treatment scale of 100000 tons of waste lithium batteries (53 yuan + 50,000 tons of lithium iron phosphate) in the second quarter of 2023, with an estimated output of 12000 gold tons of cobalt, manganese and nickel, 7000-7500 tons of lithium carbonate and 8000-11000 tons of battery-grade iron phosphate. In the future, after the honeycomb energy cooperation project is put into production, the company's processing scale and product scale will rise to a higher level and maintain the leading level in the industry.
Lithium recycling maintains a high boom, and the market competition is fierce. With the rapid development of new energy vehicle market and the wide application of electrochemical energy storage, the resources of superimposed battery materials are scarce, the total recovery capacity is greatly increased, and the market competition is unprecedentedly fierce. According to statistics, at present, the effective capacity of recycling in China is about 600000 tons of waste batteries per year, while the theoretical decommissioning of lithium batteries in 2021 is 512000 tons, and the actual recovery of waste lithium batteries is 299000 tons. There is a high mismatch between the capacity of recycling and the supply of battery waste. It is expected that the mismatch will still exist before the large-scale decommissioning of power batteries in 2025.
Layout MPH processing business to improve the overall profitability. At present, a large number of domestic enterprises have invested in the development of nickel laterite ore overseas, which is made into nickel intermediate nickel hydroxide and cobalt hydroxide concentrate (MHP), and then to produce nickel sulfate in China, which has become the mainstream production path of ternary lithium battery material industry. In December 2022, the company's MHP processing business has completed the transformation of the production line and put into production. MHP raw materials are mainly purchased from overseas markets, and the main products are battery-grade nickel sulfate and battery-grade cobalt sulfate. MPH business is expected to become a new profit growth point for the company's lithium cycle plate.
Gather various resources to build battery recycling channels. The company actively carries out the construction of power battery recycling system and the layout of recycling channels around six major channels. From 2022 to the present, the company has established strategic partnerships with Xingheng Power, Haitong Hengxin, Shanxi products Group, Guangzhou Huasheng, JD.com Science and Technology, Jinghe Shaanxi Coal Research Institute, Aichi Automobile, Stellantes (Shanghai), Honeycomb Energy and other enterprises and institutions, deeply binding multi-resources with diversified cooperation modes. Jointly build a recycling ecosystem of waste lithium batteries to form a lithium battery service and recycling system with the characteristics of Tianqi enterprises.
Investment suggestion: it is estimated that the return net profit of the company from 2022 to 2024 is RMB 445,585 million respectively, the corresponding EPS is 0.61 plus 1.17max 1.54 yuan per share, and the corresponding PE is 28x/14x/11x, maintaining the "recommended" rating.
Risk hints: the risk that the development of the new energy vehicle industry is not as expected; the risk of rising waste prices upstream; the risk that the company's lithium recycling capacity releases the risk that it is not as expected; the risk that the profitability of other businesses is not as good as expected; the risk of increased competition in the industry.