Event: the company signed an agreement on the purchase and sale of lithium carbonate to dispose of the lithium concentrate in stock
Rongda Lithium Industry, a wholly owned subsidiary of the company, signed a "Lithium Carbonate purchase and Sale Agreement" with Panzhihua Seven Star Optoelectronics on December 24, intending to dispose of the company's lithium concentrate and process it into lithium carbonate for sale. The contract was signed for 300 tons of battery-grade lithium carbonate at a price of 1616,600 yuan per ton with a total amount of 48.48 million yuan. the contract period is from December 24, 2017 to March 31, 2018.
Lithium concentrate inventory disposal can contribute to a certain profit.
According to the 2016 annual report, the company's lithium concentrate inventory is 3624 tons, equivalent to about 450 tons of lithium carbonate equivalent. Similarly, according to 161600 yuan / ton, the total value is 72.72 million yuan. The commissioned processing of the stock lithium concentrate into battery-grade lithium carbonate can contribute to a certain profit for the company.
Speed up the distribution of lithium salt, the resumption of lithium ore production is in sight
The company holds methyl kalixene ore with reserves of 1.02 million tons of lithium carbonate and the original mineral capacity of 450,000 tons / year (expected to be expanded to 105 million tons / year in the future). Production has not been resumed since 2014. Over the past 17 years, the price of lithium carbonate has continued to rise, and the company has actively distributed downstream lithium salts. In addition to the 22000-ton lithium salt project planned for 2013 (to be built), the company set up a new subsidiary Rongjie Lithium Industry in March and completed the acquisition of 80% stake in Chang and Huali in June, with nearly 3000 tons of lithium carbonate production capacity. The layout of the industrial chain is perfect, waiting for the resumption of production of lithium ore, the future performance contribution is considerable.
Investment suggestion
In 17 years, the company completed the acquisition of 65% of Dongguan Derry's equity (mainly engaged in lithium power equipment, with a net profit of 33.43 million yuan in 16 years), completed the acquisition of 80% of the shares of Chang and Huali, and increased its holding of 20% of Rongjie Metal (with 700t / year cobalt metal production capacity). All the above companies have contributed to their performance since 18 years; in addition, the company's electronic schoolbag business will also contribute to some performance. Without considering the shutdown and resumption of production, the EPS of the company from 2017 to 2019 is expected to be 0.02,0.73,0.83 yuan respectively, and the corresponding PE at the current stock price is 1556 times, 45 times and 39 times respectively, maintaining the "buy" rating.
Risk tips: low expectations of contract performance; uncertainty of mine resumption; lithium salt production release is lower than expected; subsidiary performance contribution is lower than expected; electric vehicle sales are low expected; lithium price reduction risk.