Event: 1) the company acquired 17.67% of Tiancheng Lithium Industry with its own or self-raised funds of 212 million yuan, and held 51% equity after the acquisition, and the company became the controlling shareholder of Tiancheng Lithium Industry; 2) the acquiree promised to use 80% of the acquisition money (170 million yuan) to buy shares of listed companies, showing confidence.

Further acquisition of Tiancheng Lithium to 51% stake, 80% of the acquisition money will be used to increase the shares of listed companies. Company announcement: 1) signed an "equity transfer agreement" with Tiancheng Management, Yiyuan Lithium, Dong Aihua and Li Jinping to acquire its 11.31% and 6.36% equity interest in Tiancheng Lithium Industry from Tiancheng Management and Yiyuan Lithium with its own or self-raised RMB 212 million, respectively. Upon completion of the transaction, the company will hold 51.00% of the equity of Tiancheng Lithium and become its controlling shareholder. Tiancheng Lithium Industry promises that the company's return net profit from 2022 to 2024 is not less than 1.80,2.00 and 210 million yuan respectively. 2) the acquiree undertakes to purchase shares of Kanglonda listed company after the completion of this transaction, and the purchase amount shall not be less than 80% (170 million yuan) of the consideration of this transaction, and the purchase will be completed no later than 90 days after the receipt of the last payment. The purchase methods include, but are not limited to, agreed transfer, bulk trading, centralized bidding, etc., and the large increase in shares demonstrates the acquiree's confidence in the business development of the listed company.

Cut into lithium salt: buy Tiancheng lithium industry layout mica to extract lithium, resource endowment + supply exceeds demand to ensure high gross profit. 1) layout: in October 2021, the company entered the lithium carbonate and lithium hydroxide business by acquiring a 33.33% stake in Tiancheng Lithium Industry. 2) Endowment: in terms of resources, Tiancheng Lithium Industry ploughs the lithium capital of Yichun, Jiangxi Province, and ensures the effective supply of raw materials. It is the largest supplier of Jinhui Lithium Industry, one of the five major mica lithium extraction enterprises in Yichun. In terms of production capacity, Tiancheng Lithium Industry's 10,000-ton lithium carbonate equivalent lithium sulfate solution production line has been completed, entered the trial production stage in May, and has now reached the design capacity. 3) Prospect:

In terms of price, China will still maintain a tight balance of lithium carbonate in 2022, the gap between supply and demand will expand in 2023, the profitability of the industry will be further improved, and the price of lithium sulfate solution is expected to remain high.

Acquisition of lithium ore: hold a stake in the Marie spodumene project, open up the upper-middle reaches, and open up the growth space. 1) Industry: benefiting from the development of the lithium industry, the lithium industry has entered a period of rapid growth, and lithium has grown from "small metal" to "big metal". Upstream and downstream enterprises production and marketing binding + industrial vertical integration has become a trend. 2) Resources: in June 2022, the company and its wholly-owned subsidiaries acquired a 100% stake in Taian Xinchang and held a 7.23% stake in the Bougouni spodumene project in Mali after the acquisition, and indirectly had the right to underwrite not less than 80% of the lithium concentrate products of the mine for three consecutive years. Benefiting from the sharp increase in demand for lithium batteries, the average price of lithium mines rose 43 per cent, and the project IRR rose from 50.9 per cent to 91.2 per cent based on an annual output of 238000 tons. 3) extension: after the completion of the acquisition, the company has opened up all the links from upstream lithium mining to mid-stream lithium salt processing: on the one hand, it is imported from abroad through spodumene ore, and the overall planning target for lithium concentrate is 238,000 tons / year and 100,000 tons / year. It is expected to be put into production in the second quarter of 2023. On the other hand, through the procurement of local lithium mica + self-built concentrator, it is conservatively estimated according to the sales volume of lithium sulfate solution of Tiancheng lithium industry of 5712 tons / year, and the corresponding net profit is 571 million yuan / year.

Profit forecast and investment rating: we maintain the company's estimated EPS of 1.48,3.44,5.35 yuan in 22-24, respectively, corresponding to PE of 34,14,9 times, maintaining a "buy" rating.

Risk hints: slow production of Vietnam base, less-than-expected lithium mining, large fluctuations in lithium salt prices, etc.