Key points of investment:
The lithium carbonate business created the second-highest growth in the company's performance. The company's lithium resources mainly come from old halogen, a by-product of preparing potassium chloride from Dongqar Khan Salt Lake, and has developed a complete “absorption film” process to address the problem of the high magnesium-lithium ratio of old halogen. The company currently has a production capacity of 10,000 tons of lithium carbonate, with a sales cost of 3-35,000 yuan, at the left end of the cost curve; through the Tibetan Youth Fund, it is planning a total of the second phase of the 100,000 ton lithium carbonate project. The first phase of the 50,000 ton lithium carbonate project is expected to be produced normally in 2025. After conditions are ripe, the second phase of the 50,000 ton lithium carbonate project is expected to be built within 2025-2027, and the cost per ton is expected to be comparable to that of Charkhan Salt Lake. In addition, the company plans to acquire Jiezechaka Salt Lake and Longmucuo Salt Lake in Nitu County to continue increasing the lithium resource layout.
The second-largest producer of potassium chloride in China, settled to expand potash fertilizer production capacity in Laos. The company relies on mining rights of 724.35 square kilometers east of the Qinghai Chaerhan Salt Lake Railway to produce potassium chloride using intercrystalline brine as a raw material. It currently has a production capacity of 2 million tons of potassium chloride, maintains an annual output of more than 1 million tons, and the operating cost per ton is around 1,000 yuan. The company is also actively deploying potassium resources in Laos, taking advantage of the Vientiane region's climate, surrounding facilities, transportation, terminal market and other advantages to build the first phase of 1 million tons of potassium chloride production capacity. It is expected to be put into operation as soon as 2026. In terms of reserve resources, the company is speeding up the three major projects of the Qinghai Mangya Executive Committee Dalangtan Heibei Potash Mine, the Qinghai Mangya Xingwei Alishi Mountain Potash Mine, and the eastern section of the Qinghai Mangya Xingwei Deep Brine Potassium Mine in the Xiaoliangshan-Dafengshan area to ensure the company's future supply of potassium resources.
Participate in Julong Copper and continue to enjoy a high return on investment. The amount of copper registered by Julong Copper is 10.72 million tons. It is a world-class porphyrous copper mine with the largest proven copper resource reserves in China. The company enjoys 30.78% of the rights. The first phase of the project has reached production capacity of 150,000 tons of copper, the second phase is expected to be put into operation by the end of 2025, and the third phase is expected to increase the total production capacity to 600,000 tons. In 2023, Julong Copper Mine achieved copper production of about 154,000 tons, with investment income of 1,296 billion yuan, accounting for 37.90% of the company's net profit; in 2024, it ensures an annual copper production of 158,000 tons, making every effort to achieve the production target of 166,000 tons, and is expected to continue to bring a rich return on investment to the company.
Profit forecast and investment advice: The company's net profit to mother is expected to reach 25.27/29.96/4.451 billion yuan in 2024-2026, corresponding EPS of 1.60/1.90/2.82 yuan/share. The current stock price corresponds to a price-earnings ratio of 19.3/16.2/10.9 times. Considering that the company's future business in potash, lithium salt and copper will continue to grow, the company was given a fixed PE valuation premium of 23.2 times in 2024, with a corresponding market value of 58.7 billion yuan, and a corresponding target price of 37.16 yuan. For the first time, coverage was given, giving the company a “buy” rating.
Risk warning: Product prices fall short of expectations, environmental risks, planned projects fall short of expectations.