Key points of investment
In 2023, the company achieved total revenue of 21.579 billion yuan, a year-on-year decrease of 29.80%; net profit to mother of 7.914 billion yuan, a year-on-year decrease of 49.17%; net profit after deducting non-return to mother of 8.724 billion yuan, a year-on-year decrease of 43.15%; and net cash flow from operating activities was 12.105 billion yuan, a year-on-year decrease of 30.78%.
Looking at a single quarter, 2023Q4 achieved revenue of 5.789 billion yuan, -19.57%, and -0.77% month-on-month; realized net profit of 2,314 billion yuan, -33.64% year-on-year, and +360.96% month-on-month. The main increase was mainly due to the company's mining concession revenue affecting Q3 net profit.
The company's sales volume of potassium chloride in 2023 was +13.33% YoY
In 2023, the company produced about 4.926 million tons of potassium chloride, -15.07% year on year; sales volume was about 5.6 million tons, +13.33% year over year. Inventory volume was 67.2 million tons, -57.62% YoY. The company's overall production of potassium chloride is stable. According to the company's disclosure, the operating cost of a single ton of potassium chloride for the full year of 2023 was 1270.6 yuan/ton.
The company's lithium carbonate sales volume in 2023 was +24.62% YoY
In 2023, the company produced about 36,000 tons of lithium carbonate in 2023, +16.28% year-on-year; sales volume was about 37,600 tons, +24.62% year-on-year. The inventory volume was 2,619 tons, or -36.98% YoY. According to the company's disclosure, the operating cost of a single ton of lithium carbonate for the full year of 2023 was 47,000 yuan/ton, and the increase in the company's operating costs was mainly due to the loss of mining rights proceeds.
The company's new projects are progressing steadily
The company's 40,000 tons/year basic lithium salt integration project was approved by the Haixi Mongol and Tibetan Autonomous Prefecture Ecological Environment Bureau on March 24, 2023. The new 40,000 ton basic lithium salt integrated project is expected to be completed by the end of 2024. At that time, the company will further consolidate its position as the leading lithium extraction leader in salt lakes in China. In addition, the company's potash fertilizer uses “going global” as a strategic key point to steadily promote cooperative development of overseas mineral resource projects in Africa, Southeast Asia, etc., promote the establishment of stable overseas resource connections, export standards, technology, equipment and services abroad, and steadily increase the global market share and influence of potash fertilizer, magnesium and lithium products.
Profit forecasting and valuation
The company has high-quality domestic lithium resources, and the new lithium salt project is expected to be completed by the end of the year. The company's leading position is stable and growth is obvious. Due to the sharp decrease in current lithium prices compared to the average price in 2023, we cut the company's profit. We expect the company's net profit to be 7.65 billion yuan, 8.31 billion yuan, and 9.21 billion yuan in 2024-2026, respectively, -3.3%, +8.6%, and +10.9% year-on-year, respectively. EPS was 1.41/1.53/1.70 yuan/share, respectively, and the corresponding PE was 11.7/10.8/9.7 times, respectively, maintaining the company's purchase rating.
Risk warning
Sales of new energy vehicles fell short of expectations, the progress of the company's projects fell short of expectations, and lithium prices fluctuated greatly.