Core views:

Net profit to mother increased 227% month-on-month in 23Q3, and the results were in line with expectations. According to the company's three-quarter report, 23Q1-Q3 achieved net profit of 1,095 million yuan, a year-on-year decrease of 74.8%; Q3 achieved revenue of 1,870 billion yuan, a year-on-year decrease of 37.8% and a year-on-month decrease of 5.3%; realized net profit attributable to mother of 483 million yuan, a year-on-year decrease of 63.7%, and a month-on-month increase of 227%; net cash flow from operating activities - 666 million yuan, a year-on-year decrease of 155.3% and a year-on-month decrease of 164.7%; asset liability ratio of 36.8% With a year-on-year increase of 1.40 PCT and an increase of 7.28 PCT from the beginning of the year, the company's overall performance was in line with expectations.

In 23Q3, the prices of lithium ore and lithium salt fell simultaneously. According to Asia Metal Network, the average arrival price of 23Q3 lithium concentrate SC6 was 3,413 US dollars/ton, down 30% year on year and 23.9% month on month. According to Wind, the average domestic prices of lithium carbonate (99.5%) and lithium hydroxide (56.5%) in 23Q3 were 24.1 and 224,000 yuan/ton, respectively, down 50.1%, 52.9% year on year, and 5.5% and 15.1% month on month.

We look forward to the gradual development of our own lithium mine. According to interactive information exchanged with the company's investors, the company's SabiXing lithium mine in Zimbabwe began trial production in May of this year. By the end of August, the mine is expected to produce 200,000 tons of lithium concentrate (30,000 tons of LCE) per year after full production. The total production capacity with the domestic Sichuan Yelonggou lithium mine will reach 40,000 tons of LCE. After the Sabixing lithium mine is fully produced, the company's lithium salt self-supply rate will increase dramatically. Meanwhile, the prospecting rights of Pocitos Salt Lake and the participating Sichuan Yajiang Huirong Mining Co., Ltd. provide future incremental potential.

Profit forecasting and investment advice. The company's EPS for 23-25 is expected to be 1.66/2.03/2.18 yuan/share, respectively, and the PE corresponding to the latest closing price is 14.3/11.7/10.9 times, respectively. The 23Q4 peak season cycle for downstream terminals is expected to drive a recovery in apparent demand, and lithium salt prices may still fluctuate mainly at high levels in the short term.

Considering the company's growth, we think it is reasonable to give the company a 23 year 16 times PE valuation. The corresponding company's reasonable value is 26.50 yuan/share, maintaining the company's “buy” rating.

Risk warning. Sales of new energy vehicles, power batteries and energy storage batteries fall short of expectations; risk of falling lithium prices; risk of developing, operating and cost control of overseas projects; and risk of exchange rate fluctuations.