Key points of investment:
The company is deeply involved in the field of electrolytes and continues to rank first in the world in terms of market share. The cost advantage of the integrated layout of the electrolyte industry chain is obvious, and it is expected to benefit from the continuous increase in downstream demand brought about by power and energy storage batteries; the accelerated expansion of the new energy structural adhesive business is expected to continue to improve the company's profitability.
Increased lithium battery shipments drive increased demand for electrolytes
The domestic policy side continues to increase, and the downstream energy storage battery boom is still driving up demand for electrolytes. We expect global lithium battery shipments to reach 2,387 GWh in 2026, with a three-year CAGR of 27%; global electrolyte shipments of 2.92 million tons and a three-year CAGR of 31%; global shipments of lithium hexafluorophosphate in 2026 will be 380,000 tons, with a three-year CAGR of 31%; global lithium bisfluorosulfonimide (LIFSI) shipments will be 88,000 tons in 2026, or 55% three-year CAGR. The continuous growth of the industry has raised the company's development ceiling. LIFSI leads the growth rate as an emerging product and has become the strongest growth point in the industry.
The integrated layout of the electrolyte industry chain highlights cost advantages
Of the electrolyte cost, lithium salt accounts for about 66%, and additives account for 11%. In 2023, the company's self-supply ratio of lithium salt exceeded 95%, and some core additives exceeded 80%, building the company's solid cost advantage. In 2023, the company's electrolyte sales reached 396,000 tons, +24% year over year. In 2023, the company's domestic electrolyte market share reached 36.4%, and the global market share reached 31.2%, ranking first. Under the trend of increasing industry concentration in the future, we expect the company to further seize market share through an integrated layout.
Lithium salt export sales and structural adhesive release volume are expected to contribute to new profit advantages
The company's proprietary lithium salt process improves the purity and yield of raw materials, and the LIFSI process also enables recycling of by-products. At present, the profitability of lithium salt is at its bottom in recent years and has basically stabilized. In 2024, the company began exporting lithium salt. It has now obtained orders from major customers from BYD, Guoxuan Hi-Tech and Ningde Times, which is expected to provide a new growth point for the company's performance. The company acquired Dongguan Tengwei to build structural adhesive products for lithium batteries. By the end of 2023, structural adhesives were continuing to increase and had formed a certain market size, and it is expected that the company's profitability will continue to increase in the future.
Profit forecasting and investment advice
We expect the company's 2024-2026 revenue to be 161.2/198.7/22.91 billion yuan, respectively, +4.6%/+23.3%/+15.3%; net profit to mother will be 12.8/19.6/27.1 billion yuan, respectively, -32.1%/+52.6%/+38.0% year-on-year, with a three-year CAGR of 12.7%, giving it a “buy” rating.
Risk warning: NEV sales fall short of expectations; raw material prices fluctuate greatly; profitability declined due to increased industry competition; risk of deviations in industry size estimates.