Incident: The company released the 2023 Annual Report and the 2024 First Quarter Report. Revenue and profit declined year-on-year.
The company's revenue in 2023 was 6.013 billion yuan, -25.22%; net profit to mother was 2,208 billion yuan, -32.98% year over year; net profit after deducting non-return to mother was 2,130 billion yuan, -33.86% year on year. The company's Q1 revenue in 2024 was 1,127 million yuan, -45.63%; net profit to mother was 256 million yuan, -76.63% year over year; net profit after deducting non-return to mother was 228 million yuan, -79.32% year on year. The company's revenue and profit for the first quarter of 2023 and 2024 both declined year over year.
In 2023, the company's Bikita mine raw material end project was completed, and the construction of the 1 million ton beneficiation plant at the Tanco mine continued to advance. (1) BIKITA: The company's “Bikita lithium mine 2 million tons/year (spodumene) construction project” and the “Bikita lithium mine 2 million tons/year (lithium permeable feldspar) renovation and expansion project” were completed in July 2023 and officially put into trial production. On November 9, 2023, after orderly equipment installation, commissioning and trial production, the above two projects achieved stable production, reached the production capacity and product quality of the project design plan, and achieved production standards. The two projects each produced about 300,000 tons of spodumene concentrate and 300,000 tons of chemical-grade lithium-permeable feldspar concentrate per year, increasing the raw material self-sufficiency rate of the company's lithium salt business. (2) Tanco:
The 180,000 tons/year spodumene mining and selection line at the Canadian Tanco mine belonging to the company went smoothly, and the products continued to be shipped back and put into use. In February 2023, the company held the 29th meeting of the 5th board of directors to deliberate and pass the “Proposal on Investing in the Construction of 1 Million Tons/Year Mining Options for Canada's Tanco Mining Area”, and the board of directors of the company approved investment in the construction of a new Tanco mine 1 million tons/year mineral processing project. In 2023, the company will actively promote the design of 1 million tons/year plant selection and preparation for government EIA and approval.
The company plans to acquire the Kitumba copper project in Zambia and is expected to add new copper growth points in the future. On March 14, 2024, Afmin, a wholly-owned subsidiary of the company, signed a “share sale agreement” with Momentum and Chifupu respectively. Afmin plans to acquire 50% of Momentum's Junction shares and 15% of Chifupu's Junction shares using a total benchmark of $58.5 million in cash. Junction's main asset is the Kitumba copper project in Zambia. The project is currently under development. According to the resource volume estimation report that complies with the Australian JORC specification (2012 edition) issued by MsaGroup (Pty) Ltd., a third-party independent agency, on July 29, 2015, the total amount of copper resources found in the Kitumba copper mine area is 27.9 million tons, 614,000 tons of copper metal, and 2.20% copper grade.
Investment advice: With the gradual release of the company's mining side and smelting side, the superimposed lithium price will drop sharply. The company's revenue for 2024-2026 is expected to be 63.22/80.46/9.804 billion yuan, respectively, and net profit to mother will be 15.27/ 17.88/ 2,292 billion yuan, corresponding to PE 16.46/14.05/10.96 times, maintaining the “buy” rating.
Risk warning: lithium salt prices are falling faster than expected; the company's production capacity release falls short of expectations; downstream demand falls short of expectations