[Investment points

The results in '23 and 24Q1 were in line with expectations, and net profit for 24Q1 increased month-on-month. The company's revenue for 23 years was 6 billion yuan, down 25%; net profit to mother was 2.2 billion yuan, down 33%; after deducting non-net profit of 2.1 billion yuan, the same decrease of 34%, in line with market expectations; of these, 23Q4 revenue was 1 billion yuan, a decrease of 61%, a decrease of 28%; and net profit to mother was 140 million yuan, a decrease of 89%. The decline was 76%, and non-net profit of 110 million yuan was deducted, the same decrease was 91%, and the circular reduction was 80%. Q1 revenue for 2014 was 1.1 billion yuan, down 46%, up 12%, net profit to mother of 260 million yuan, down 77%, 86%, deducted from non-net profit of 230 million yuan, down 79%, 117%, gross profit margin 38%, and 17pct, in line with market expectations.

24Q1 lithium salt sales exceeded expectations, and sales are expected to increase by nearly 200% in '24. On the shipping side, lithium salt production in 23 was 18,000 tons, down 20%, sales volume 17,000 tons, and 28%, of which we expect Q4 sales to be about 7,000 tons; Chunpeng Lithium's 35,000-ton lithium salt project was tested in November '23 and achieved production in February '24. At the end of Q1, the company had a total lithium salt production capacity of 66,000 tons; 24Q1 lithium salt sales volume was about 8,000 tons, up about 15% month-on-month, and sales volume exceeded expectations. We expect total sales volume to reach 45,000 to 50,000 tons in '24, up 160-200%. On the profit side, the average tax-inclusive price of lithium salt in '23 was about 276,000 yuan, with a contribution deducting 90,000 yuan+ of non-profit; the 24Q1 average tax-containing price of lithium salt was about 100,000 yuan, a single ton withholding 16,000 yuan of non-profit, and the contribution deducted about 130 million yuan of non-profit. Of these, Zimbabwe's exchange losses affected a total of 100 million yuan. If added back, 29,000 yuan of non-profit per ton was deducted.

The full cost of Bikita dropped to 65,000 yuan in 24Q1, the impact on foreign exchange was 12,000 yuan, and Q2 costs are expected to be further reduced. Our own mine achieved 16,000 tons of lithium salt production in '23, the self-sufficiency rate increased by 65 pct to 86% year on year, and will reach 100% in '24. The Bikita mine in Zimbabwe has a production capacity of 2 million tons of lithium permeable feldspar plus 2 million tons of spodumene ore processing in November 23, corresponding to 60,000 tons of LCE; the Zimbabwean power transmission and transformation project was successfully transmitted in March 24, and the main construction was completed in 23Q4. The power generation capacity reached 20% + of the mine's daily electricity consumption by the end of April, greatly reducing electricity costs. The full cost of Q1 excluding exchange profit and loss is estimated to be around 65,000 yuan/qton2. cost Further decline is expected. Canada's Tanco mine currently has 180,000 tons of spodumene mining and production capacity. The 1 million ton beneficiation plant is planned, corresponding to 20,000 tons of LCE, which is expected to release production capacity in 25 years. It mainly processes high-grade tailings. The CIF cost of concentrate is estimated to be 600 US dollar+, corresponding to a total cost of about 60,000 yuan, which has a significant cost advantage.

Cesium rubidium contributes to stable profits, and the copper business is expected to become a subsequent growth point. Cesium Rubidium Fine Chemical sold 999 tons in 23 years, up 26%; sales volume of cesium formate was 2,946 bbl, up 13%. The cesium-rubidium business achieved revenue of 1.1 billion yuan, a 21% increase, contributing 500 million yuan+ profit, and 30%; 24Q1 contributed 100 million yuan+ profit. We expect to achieve 600 million yuan+ profit in 24 years, an increase of about 20%. The company acquired 65% interest in the Kitumba copper mine project in Zambia in March, and aims to complete the integrated layout of 50,000 tons of copper and metal mining, selection and metallurgy in 25 years. The cost per ton is about 4,000 US dollars, and it is expected to contribute 10-15 billion yuan in long-term profits.

Q1 The sharp depreciation of the Tianjin yuan led to a significant increase in financial expense ratios, and operating cash flow declined year-on-month.

The fee rate for the 23-year period was 13%, the same increase of 6.7 pct, the 24Q1 fee rate of 20%, the same increase of 12 pcts, and the year-on-year increase of 6 pct. Among them, the financial expenses ratio was 12%, and the year-on-year increase was 10 pcts, mainly due to the sharp depreciation of the Zimbabwean dollar in Q1, which led to an exchange loss of 100 million yuan. The 24Q1 net cash flow from the company's operating activities was 100 million yuan, down 124% from the same period, and a decrease of 129%. The main reason was that accounts receivable increased by 140 million yuan compared to the beginning of the year; capital expenditure was 280 million yuan, an increase of 59% over the same period, a decrease of 61%. At the end of Q1, the company's inventory was 1.7 billion yuan, up 9% from the beginning of the year; the number of projects under construction decreased by 320 million yuan from the beginning of the year, mainly due to the transformation of Chunpeng Lithium's 35,000-ton project.

Profit forecast and investment rating: Considering the remarkable results of the company's cost reduction, we raised the company's 24-25 profit forecast. The company's net profit for 24-26 is 15.8/20.7/3.03 billion yuan (the original forecast for 24-25 was 1,49/1.97 billion yuan), -29%/+32%/+46% year-on-year, corresponding PE is 16x/12x/8x, maintaining the “buy” rating.

Risk warning: Production capacity release falls short of expectations, demand falls short of expectations.