Key points of investment
Incident: On the evening of March 1, the company announced the “Double Improvement of Quality and Return” action plan. The main measures are:
(1) Continue to adhere to the development strategy of “consolidating upstream, strengthening the midstream, and penetrating downstream”; (2) accelerate the pace of technological transformation and create a platform for talent recruitment; (3) adhere to the spirit of ingenuity and continuously enhance the company's core competitiveness; (4) continue to improve the quality of information disclosure and efficiently convey corporate value; (5) be investor-oriented and value investor returns.
Continue to consolidate the upstream lithium resource layout and consolidate the leading position in lithium resources. The company also lays out high-quality hard rock lithium ore and salt lake lithium ore resources, using the Greenbush mine owned by Thalison, a wholly-owned subsidiary of the holding subsidiary Wenfield, and the Sichuan Yajiangcuola mine controlled by the company as resource bases, and further expanded its strategic layout for high-quality salt lake lithium resources at home and abroad through investment in SQM and Zabuye Lithium. Currently, the company has achieved 100% self-sufficiency in lithium resources. The company is actively and orderly advancing the work related to the selection of the first phase of the Yajiangcuola spodumene ore mining and selection project.
Shenghe Lithium, the holding subsidiary of the company, has completed the introduction of strategic investors and obtained the registration for the Tebaigou Tailings Depot project in Cuola Spodumene Mine in Yajiang County on January 9, 2024. According to public information estimates from related companies, by the end of 2023, the Greenbush mine equity resources laid out by the company reached 4.16 million tons of LCE (equity ratio 26%), 510,000 tons of LCE (equity ratio 80%), Atacama Salt Lake equity resources of 2.39 million tons of lithium metal (equity ratio 22%), and the total equity resources of Zabuye Salt Lake reached 360,000 tons of LCE (equity ratio 20%), totaling about 1.76 million tons of LCE. In the future, the company will continue to implement the concept of a global industrial layout to provide more guarantees for the company's long-term stable resource self-sufficiency.
Focus on increasing production and capacity, and advance project construction in a steady and orderly manner. The company has been deeply involved in the processing of lithium chemical products for many years. Currently, there are five production and two lithium chemical product production base projects under construction or planning. Among them, the Suining Anju Plant confirmed the production of products that meet battery-grade lithium carbonate standards on December 21, 2023; lithium hydroxide products produced by the Quinana Phase I project in Australia have received samples from SK On Co. Ltd and Northvolt ETT AB have been certified, and shipments will begin in January 2024. The company's current lithium chemical product nameplate production capacity is 88,800 tons/year. In addition to the announced planned lithium chemical product production capacity, the two will total more than 140,000 tons/year in the future. In the future, the company will continue the existing “vertical integration” business model, steadily implement the basic lithium salt production capacity expansion plan in line with market conditions, and further develop the synergy effect of the industrial chain.
Establish various forms of strategic partnerships with leading companies upstream and downstream of the value chain. The company will continue to strategically lay out new energy materials and next-generation battery technology manufacturers, including solid-state batteries, in the NEV value chain, and develop deeper partnerships with them, such as cooperating in business such as precursor production and battery recycling, focusing on investment opportunities in electric vehicles and energy storage applications, actively participating in the downstream investment layout, and preparing for future trends in making better use of lithium in new battery applications.
Profit forecast and investment rating: We maintain the forecast of the company's net profit of 77.4/35.4/4.20 billion yuan for 23-25, which is -68%/-54%/+19% year-on-year, corresponding PE is 11/25/21x, maintaining a “buy” rating.
Risk warning: Production capacity release falls short of expectations, demand falls short of expectations