[Core conclusion] The aliphatic amine business has established a solid foundation, and the organic solvents and synthetic fragrance business has opened up room for growth.
Organic Solvents has launched a new type of lithium extraction and lithium battery recycling business in salt lakes, and the equity production capacity of flavors and fragrances is expected to increase tenfold. We are optimistic about the driving force brought about by the growth of the organic solvents and synthetic fragrance business. The company's net profit for 24/25/26 is 3.65/5.17/640 million yuan, which is currently 13.6 times PE. We used the segmented valuation method and gave a 24-year target price of 32.60 yuan. First coverage, giving a “buy” rating.
The new extraction method for extracting lithium from salt lakes has unique advantages, and the leading order was successfully put into operation. The company's new extraction technology overcomes problems such as corrosion of traditional extraction equipment and environmental pollution, and has a small investment scale and a high degree of automation, which can extend effective working hours. The extraction method has a unique advantage in recovering lithium precipitated mother liquor. After using the company's extractant, the recovery rate of the lithium precipitated section increased by 10 pcts, and the production capacity increased by about 1,000 tons. The lithium precipitated mother liquor recovery project led by the company helped Salt Lake Co., Ltd. increase the comprehensive lithium recovery rate by 5 pcts and increase production by more than 20 tons per day. Salt lake lithium extraction is autonomous and controllable, and has cost advantages. As leading production schedules increase and new projects continue to advance, we are optimistic about the application prospects of the company's extraction method.
Cooperate with Geely Yaoning to lay out a 10 billion lithium battery recycling market. The year 25 is expected to usher in a new wave of power battery decommissioning. The company and Geely Yaoning will jointly build 100,000 tons/year of waste lithium recycling capacity. Yaoning can guarantee the supply of waste batteries. The company will inject technology into the joint venture, and the 10,000 ton production capacity is expected to be completed in June '24. The company's extractant is used in Grimmie, a leading waste lithium recycling company, and has a good demonstration effect. The subsidiary Zhejiang Xinli wants to lay out the recovery of lithium mother liquid from mines and mica deposits, and the application scenarios of the extraction method continue to expand.
The fragrance business joined hands with high-quality customers, and equity production capacity expanded tenfold. The company has cooperated closely with the international fragrance giant Givaudan for more than ten years and has its exclusive technical license. About 75% of the products are supplied to Givaudan. After the technical transformation of the Jiangsu project is completed, it will produce more than 60 kinds of spices, and the variety of products will double. The Ningdong project is expected to enjoy the cost advantages brought about by industrial clustering. The company has a reasonable production capacity layout, including major fragrances such as salicylates, and has launched high-value-added products such as synthetic musk, sandalwood, and tobacco, covering the three major application fields of daily chemicals, food, and tobacco. In the future, the company's equity production capacity is expected to increase from 0.82 million tons in 23 to 82,400 tons, and the gradual release of production capacity will continue to inject growth momentum into the company.
Risk warning: raw material price fluctuations, project commissioning falls short of expectations, product price fluctuations, etc.