Items:
The company released the third quarterly report of 2023, the total operating income in the third quarter of 2023 was 1.404 billion yuan (year-on-year-32.44%), the net profit was 568 million yuan (- 22.08%), and the non-return net profit was 535 million yuan (- 26.21%). In the first three quarters, the company achieved revenue of 5.005 billion yuan (year-on-year-8.81%); net profit of 2.07 billion yuan (+ 0.92%); and deduction of non-return net profit of 2.025 billion yuan (+ 1.32%).
Peace viewpoint:
Lithium prices continued to fall in the third quarter from the previous quarter, and the increase in resource self-sufficiency rate drove the gross profit margin to strengthen. In 2023, the average price of Q3 battery-grade lithium carbonate was 2406 million yuan / ton, down 5.5% from the previous month and 50.1% from the same period last year. Lower lithium prices dragged down the company's revenue, with Q3 revenue-8.23% month-on-month. Bikita mine volume in the third quarter, the company's own mine proportion further increased, profitability continued to enhance, in the context of lower lithium prices, the company's third-quarter gross profit margin improved 9.99% to 59.78%.
The output of lithium concentrate increases and the sales cost increases. In 2023, the sales / management / R & D / financial expenses of Q3 increased by 54.87% 14.15% 27.89%, 0.82%, 99.65%, 72.75%, 13.08%, 252.56% respectively. Among them, the high increase in sales expenses is mainly due to the increase in the company's lithium concentrate production; the increase in management expenses is mainly due to the merger of Bikita since May 2022, and the sharp fluctuation in financial expenses is mainly due to the increase in exchange rate losses caused by exchange rate fluctuations.
The Bikita lithium mine project has been put into production, and the lithium resources have been consolidated. In July 2023, the company's Bikita lithium mine 2 million tons / year spodumene construction project and 2 million tons / year lithium feldspar reconstruction and expansion project have been completed and formally put into trial production, with an estimated annual output of 300000 tons of spodumene concentrate and 300000 tons of chemical grade lithium feldspar concentrate respectively. The lithium permeable feldspar concentrate and spodumene concentrate produced by the two mineral processing projects continue to arrive at the company's domestic lithium salt plant, marking the company's entry into the era of full self-sufficiency in lithium ore.
Investment suggestion: the operating income of the company from 2023 to 2025 is estimated to be 79.41, 114.78 and 12.93 billion yuan (the original forecast is 97.35, 141.92 and 15.493 billion yuan), and the net profit is 33.99,42.74 and 4.669 billion yuan (the original forecast is 40.75,57.89 and 6.271 billion yuan). The corresponding PE is 7.6,6.0,5.5 times, the logic of the company's volume increase remains unchanged, the integration advantage is accelerated, the growth certainty is high, and the "recommended" rating is maintained.
Risk tips: (1) the progress of the project is not as expected and the profit growth of the company is not as expected. If the progress of the current project under construction is slower than expected, it may affect the pace of future performance growth of the company. (2) the downstream demand is lower than expected. If affected by the terminal new energy vehicles, the demand shrinks to a large extent, and the company's product sales may be affected to a certain extent.
(3) the competition in the industry is intensified. The sharp increase in competition in the industry may lead to less than expected sales of the company's products.