Event: The company released the 2022 Q3 performance forecast: net profit for 2022Q3 was 5-6.5 billion yuan, -28% - 7% month-on-month, minus non-net profit of 49.8-6.48 billion yuan, -22.75% -+0.51% month-on-month.
Macro level: In July-August 2022, China's continued high temperature weather caused widespread power stress, and lithium salt production in Sichuan was affected.
Industry level: The growth rate of demand for lithium salt far exceeds the growth rate of supply - it is still tight. Production: According to the Ministry of Industry and Information Technology and the General Administration of Customs, China's battery-grade lithium carbonate, lithium hydroxide production and lithium carbonate imports in the first half of 2022 reached 168,000, 110,000, and 710,000 tons, respectively, in July-August 2022, and 21,000 tons, respectively, and the average monthly average for July-August was +8.9%, -7.3%, and -13.3% from the first half of the year. Demand: According to the Ministry of Industry and Information Technology and the Transportation Federation, in July-August 2022, China's total lithium battery production exceeded 145 GWH, and the retail sales volume of new energy passenger vehicles was 1.015 million units. The average monthly average was +35.59% over the first half of 2022, and the penetration rate reached about 26%. Inventory: Lithium carbonate is mainly underwritten. Overall inventory in the factory and trade chain is low, and there are few scattered market orders.
Company level: The price of lithium salt continues to rise - performance release is highly certain. Price: The average price of 2022Q3 electric carbon is 482,000 yuan/ton, +3% over the previous year. Volume: The company's lithium salt production and sales volume is estimated to be 50,000 tons of LCE in 2022, 12,500 tons in Q3, 290,000 tons of Greenbush lithium concentrate throughout the year, and export sales of about 70,000 tons in Q3. Cost and profit: There was no significant change in the cost side in Q3. Net profit is expected to be 290,000 yuan/ton per ton of lithium salt, 30,000 yuan/ton of lithium concentrate, and 5.725 billion yuan per ton of Q3. Financial indicators: 2022Q3 The non-recurring profit and loss resulting from passive dilution of shares in SES shares of the company's shareholding company and the investment income of the important associated company SQM is basically zero.
Very promising in the long term - a high self-supply ratio is an advantage. Performance: The self-sufficiency rate of the company's lithium ore resources has reached 100%. In the future, with 20,000 tons of lithium carbonate in Anju, Sichuan, 24,000 tons of lithium hydroxide (equity production capacity), and Tongliang's 2000 tons of lithium metal production capacity, the company's lithium salt equity production capacity is expected to be 5.9/6.6/8.6/108,000 tons of LCE in 2022/2023/2024/2025, respectively. The growth is remarkable.
Looking ahead to 2022Q4: The price of lithium carbonate will run at 500,000 yuan/ton in October 2022. It is expected that the average price of lithium carbonate in Q4 will still rise month-on-month, and the Q4 performance release is highly certain.
Profit forecasts and investment recommendations. It is estimated that the company's net profit for 2022/2023/2024 will be 196.7/208.3/22.47 billion yuan, and the corresponding PE will be 8/8/7 times, respectively. We will give the company 10 times PE in 2023, corresponding target price of 126.90 yuan, and maintain the “buy” rating.
Risk warning: raw material prices fluctuate, project production did not meet expectations, and downstream demand fell short of expectations.