Main points of investment
The company has a high-quality methyl spodumene 134 vein, which is expected to restart development in the future. Methyl card in western Sichuan is the largest spodumene mine in Asia, with large reserves and high grade. As early as 2009, the company acquired the mining and exploration rights of Methyl Carbonate vein 134. it has 28.99 million tons of ore resources and about 1 million tons of lithium carbonate equivalent. The methyl card mine was put into production in 2010 and achieved continuous profits. Although the mine was closed at the end of 2014 due to environmental protection and other issues. However, under the strategic goal of the local government to build China's lithium capital, the problems plaguing mine restart are expected to be solved; spodumene prices have doubled in recent years, and the performance of development companies may increase significantly once the mine is restarted.
Layout of lithium salt deep processing business, improve the layout of the industrial chain. The company's original business is mainly the development of spodumene mines, lithium salt production experience is relatively limited. In 2017, the company accelerated the layout of lithium salt processing business. First, the acquisition of 80% stake in Chang and Huali, and the original 3000 tons / year battery-grade lithium carbonate, and technical transformation to expand the battery-grade lithium hydroxide production capacity to 1800 tons / year. The second is to set up Rongjie Lithium Industry together with the controlling shareholder, and lay out 40,000 tons of lithium salt and lithium metal materials business in Chenggan Industrial Park in Qionglai. At the same time, the controlling shareholder also has a number of major investment projects related to new energy in Qionglai. It is also expected to form strategic coordination with listed companies. Third, participate in Rongjie Metal, etc., and enter the field of battery materials such as cobalt salts together with the controlling shareholders.
The demand for lithium will continue to grow rapidly in the future, and prices need to closely follow the supply and demand situation. New energy vehicles are the direction of future development, especially under the current policies of governments to restrict fuel vehicles and encourage new energy vehicles, the cost of new energy vehicles is also expected to continue to decline. Overall, lithium consumption will continue to increase rapidly. We believe that the new lithium supply in 2018 is still relatively limited, and the future supply is expected to increase with the development of mines and salt lakes.
Profit forecast and rating: without considering the factors of mine resumption, the company is expected to achieve a net profit of 25 million yuan, 39 million yuan and 51 million yuan respectively from 2018 to 2020, with a corresponding EPS of 0.1,0.15,0.20 yuan respectively. The PE corresponding to the closing price of 32.71yuan per share on June 1 is 334X, 213X and 164X. In view of the possible resumption of production in the mine, maintain the company's "prudent overweight" rating.
Risk hint: mine restart progress is lower than expected; spodumene and carbonic acid prices have fallen sharply; other factors