The company releases three quarterly reports in 2023

In the first three quarters, the company realized revenue of 8.91 billion yuan,-29.1% of the same period last year, and net profit of 1.822 billion yuan,-64.7% of the same period last year. 23Q3 achieved revenue of 2.269 billion yuan, year-on-year-52.7%, month-on-month-26.9%; return-home net profit of 447 million yuan, year-on-year-72.8%, month-on-month-9.3%.

The price of lithium salt falls, and the rigidity of cost end is a drag on profit.

On the demand side, the recovery of downstream demand is slower than expected, and the sluggish market in the peak season makes the lithium salt price Q3 continue to decline. The average price of 23Q3 battery-grade lithium hydroxide is 232000 yuan,-52.7% year-on-year and-15.1% month-on-month. On the cost side, the Australian Mining Association Qmur1 pricing method makes the cost side relatively rigid, further compressing the company's profits. On the production side, the company's Sichuan Tianhua 60,000 tons, Weineng Lithium Industry Phase I 25000-ton Lithium hydroxide Project continues to climb, and the Fengxin era Phase I 30,000-ton Lithium Carbonate Project was also put into production in July. With the new capacity put into operation, economies of scale are expected to improve.

Integrated layout of upstream lithium ore resources development and assistance

The company increases the distribution of upstream lithium resources by indirectly increasing its holdings of AVZ. Among them, the Congo gold Manono project is one of the largest open-pit lithium-rich LCT (lithium, cesium, tantalum) pegmatite deposits found in the world, which is located in a good lithium metallogenic belt and has great prospecting potential. the dispute settlement in the early stage of the project has achieved positive results. In addition, the revised agreement for the Zulu lithium project in Zimbabwe, in which the company is a shareholder, was re-signed in August, whereby the company will continue to be entitled to lithium concentrate products produced by the Zulu pilot plant for three years from the first month of supply of at least 4000 tons of products, while the revised agreement expressly expires on April 1, 2025, and if Premier fails to deliver the required products or the cash settlement to settle the advance payment in full, the company is entitled to a direct interest in Zulu in accordance with the agreement.

Investment suggestion due to the decline in the price of lithium salt, we lowered the company's net profit for 23-25 to RMB 2.818, 3464, respectively. (the previous value from 23 to 24e is RMB 43.5 billion, 7.42 billion), which is-57.2%, respectively, compared with the same period last year. The corresponding PE is 8.1X/6.6X/4.8X, maintaining the "Buy" rating.

Risk hint

New production capacity and downstream demand are lower than expected, lithium salt prices fluctuate greatly, and so on.