Electrolyte profits have bottomed out and stabilized, and the industry's production capacity cleared up at an accelerated pace. The characteristics of the electrolyte cycle are obvious, and historical profit fluctuations are drastic. Under the double influence of the rapid decline in upstream lithium carbonate prices and the slowing growth rate of downstream demand, the current price decline cycle has been more than 2 years, and the gross margins of mainstream electrolyte companies have all hit record lows. In particular, the price of lithium hexafluorophosphate, which is the center of the electrolyte cost, has reached a historically low level, approaching the cost line of the third largest enterprise in the industry, causing extensive losses in hexafluoride production capacity or even the cessation of production. Supported by multiple factors, the price of electrolytes and lithium hexafluorophosphate is expected to usher in a trending inflection point and enter a new stage of steady development, supported by multiple factors such as the rigidity of lithium carbonate costs, a sharp contraction in the effective production capacity of the industry, and a recovery in downstream demand.
The company relies on a deep integrated layout to build core competitiveness. As a domestic electrolyte leader, through vertical integration, the company continuously increases the self-supply ratio of core raw materials such as liquid lithium hexafluorophosphate, lithium bisfluorosulfonimide and additives. At the same time, with its unique liquid lithium salt technology, it has significant cost advantages in the context of overcapacity and profit pressure in the industry, showing strong profit resilience and firmly occupying the number one market share. At the same time, on the basis of integration, the company created a circular economy model, recycling by-products from one process as raw materials in another process, which not only solved the problem of hazardous chemical by-product treatment, but also greatly reduced the cost of raw material procurement and hazardous chemical treatment, and further strengthened cost competitiveness.
Horizontal diversified layout to create sustainable development capabilities. In terms of electrolytes, the company's new lithium salt and additive layout has entered the harvest period, contributing new growth momentum to the main business; in terms of other battery materials, the company has cut horizontally into the cathode and precursor materials, positive and negative electrode adhesives, lithium battery rubber products and battery material recycling business, forming a strong platform synergy effect between various business segments; in terms of daily chemicals, the company binds high-quality customers at home and abroad, keeps up with regulations and market trends, and continues to launch new products. A new generation of green forms is expected to help the company's daily chemical sector create new growth points.
Prices and profits of electrolytes and hexafluoride have bottomed out, and it is expected to usher in a reversal inflection point. As a domestic electrolyte leader, the company has strong profit resilience in the downward cycle, and is expected to release profit elasticity during the upward trend phase of the industry. We forecast that the company's earnings per share for 24-26 will be 0.63, 1.12, and 1.60 yuan, respectively. Combined with the company's valuation level comparable to the mainstream electrolyte industry chain, the company will be given 18 times PE in 2025. The company's reasonable total market value is 38.52 billion yuan, corresponding to the company's overall target price of 20.16 yuan. For the first time, an increase in holdings rating was given.
Risk warning
Risk of policy changes; risk of electric vehicle sales falling short of expectations; risk of raw material price fluctuations and profit changes; risk of continued oversupply; risk of asset impairment; risk of technological route innovation.