① Due to the sharp correction in lithium carbonate prices last year, the net profit of Rongjie Co., Ltd. fell by more than 80% year on year; ② In order to withstand market risks brought about by falling prices of lithium salt products, the company will launch a commodity futures hedging business for lithium salt products in 2024.
Financial Services Association, April 17 (Reporters Liu Yue and Zeng Chuchu) Due to the sharp correction in lithium carbonate prices in 2023, the profit margins of Rongjie Co., Ltd. (002192.SZ) products have shrunk drastically. Last year's net profit fell by more than 80% year on year.
Rongjie Co., Ltd. released its annual report this evening. The company achieved operating income of 1,211 billion yuan in 2023, a year-on-year decrease of 59.53%; net profit to mother was 380 million yuan, a year-on-year decrease of 84.41%.
Judging from the performance of the single quarter, the company achieved net profit of 22.4 million yuan in Q4 in 2023, down 98.11% year on year and 59.76% month on month.
Rongjie Co., Ltd. stated in its annual report that during the reporting period, due to the impact of the market environment in the new energy lithium battery materials industry, the prices of the company's main lithium concentrate products and lithium salt products continued to fall, leading to a decline in the profits of the company's lithium ore mining and lithium salt processing business. At the same time, the profits of joint lithium salt companies also fell sharply, leading to a sharp decrease in the company's confirmed investment income.
Specifically, the revenue of lithium concentrate products and lithium salt products of Rongjie Co., Ltd. reached 59.63% and 24.3% respectively in 2023, and gross margin decreased by 5.25 and 17.53 percentage points, respectively.
In terms of lithium concentrate, the company has 1.05 million tons/year open pit mining capacity and 450,000 tons/year ore processing capacity, and plans to build 2.5 million tons/year lithium ore selection project and related supporting projects. It is worth noting that according to the opinions of relevant government departments, the company's lithium mine selection project site selection needs to be re-verified, leading to uncertainty about the construction and commissioning time of the project.
Since 2023, the price of lithium carbonate has fallen from 500,000 yuan/ton at the beginning of the year to less than 100,000 yuan/ton at the end of the year. According to data from Longzhong News, the average price of Q4 battery-grade lithium carbonate was 142,000 yuan/ton last year, down 40.77% from the Q3 average price of 239,900 yuan/ton.
In order to counteract market risks brought about by falling prices of lithium salt products, Rongjie Co., Ltd. stated in its annual report that in 2024, the company will carry out commodity futures hedging business for lithium salt products.
Futures hedging is nothing new. According to incomplete statistics from the Financial Services Association reporter, since Guangzhou Stock Exchange listed lithium carbonate futures in July 2023, it has attracted more than 20 listed companies related to the lithium industry, including Ganfeng Lithium (002460.SZ) and Tianqi Lithium (002466.SZ), to participate in hedging.
Regarding the future price trend of lithium carbonate, Li Pan, a lithium industry analyst at the Shanghai Steel Union New Energy Division, previously told a Financial Association reporter that the price of lithium carbonate fluctuated or remained in the fluctuation range of 80,000 to 110,000 yuan/ton this year, and 80,000 yuan/ton is an important cost support line. According to the Guolian Securities Research Report, the oversupply of lithium resources will increase from 2024-2025. The global lithium oversupply is expected to be 158,000 tons/247,000 tons of LCE, and lithium prices may bottom out at 70,000 to 80,000 yuan/ton.