The company is an important domestic producer of potassium, lithium salt and copper, and returns high dividends to shareholders. The company started in the potash business. In 2017, it seized the opportunity of global new energy transformation, invested in the construction of a lithium carbonate production line based on the potassium chloride production process, and also participated in Julong Copper to start the second and third growth curves. In 2023, the company's revenue was 5.226 billion yuan, and net profit to mother was 3.42 billion yuan, of which investment income was 1.263 billion yuan, +82.61% over the same period last year.

The company continues to have high dividends. The cumulative cash dividend for 2022 to 2023 reached 7.02 billion yuan, and the dividend payment rate in '22 and '23 exceeds 70%. It is expected to continue to return shareholders in the future.

It is the second largest producer of potassium chloride in China, and the scale of production is expected to double. Relying on Char Khan Salt Lake, the company became the second largest manufacturer in the domestic potassium chloride industry. In 2023, the company had a production capacity of 2 million tons of potassium chloride, an output of 1.0942 million tons, operating income of 3.215 billion yuan, accounting for 61.53% of revenue and a gross profit margin of 56.20%. The company actively lays out high-quality potash fertilizer resources at home and abroad: the country is steadily advancing the three major projects of the Dalangtan Heibei Potash Mine, and the eastern section of the Xiaoliangshan-Dafengshan area, with a total prospecting rights of 1,400 square kilometers; overseas potash exploration agreements have been signed with Laos, and the total potassium chloride resources within 157.72 square kilometers of Setani County and Bayao County are estimated to be 0.984 billion tons per year. Potassium chloride production is expected to double growth.

The “one-step” lithium extraction technology is mature, and reserves for high-quality projects have been strengthened. Mamicuo's future performance will increase significantly. The company achieved a “one-step method” to purify battery-grade lithium carbonate from ultra-low concentration brine, solving problems such as extracting lithium from ultra-low salt lake brine and excessive boron standards in salt lake lithium products. The lithium recovery rate has stabilized at over 95%. In 2023, the company's lithium carbonate production capacity was 0.01 million tons, the output was 0.0121 million tons, the cost per ton was only 0.037 million/ton, and the operating income was 1.98 billion yuan, accounting for 37.89% of revenue and 80.51% of gross profit. Currently, the company enjoys a 24% interest in Mamicuo Salt Lake. The proven usable reserves are about 2.1774 million tons of lithium carbonate, the long-term plan is 0.1 million tons of lithium carbonate, and the first 0.05 million ton lithium carbonate project is processing a mining license, and there is plenty of room for future growth; in addition, the company's subsidiary has acquired 39% of Guoneng Mining's shares. The company's two salt lakes, Longmucuo and Jizechaka, have a combined lithium carbonate reserve of 3.9 million tons (large reserves) and 28 million tons of potassium chloride (medium storage), which is expected. Continue to increase the company's reserves of high-quality salt lake resources.

It took 30.78% of Julong Copper's equity interest, injecting huge momentum into the company's performance growth. Julong Copper Mine is the largest registered copper mine in China. It is rich in resource reserves. The total amount of resources identified is 25.88 million tons of copper, 1.672 million tons of molybdenum, and 0.015 million tons of silver. The first phase of the mine has a production capacity of 0.15 million tons/year. In 2023, Julong Copper achieved copper production of 0.154 million tons, with a net profit of 4.211 billion yuan, or +78.81%, accounting for 37.90% of the company's net profit. In the first three quarters of 2024, the mine produced 0.122 million tons of copper, with a net profit of 4.428 billion yuan, accounting for 72.96% of the company's net profit to mother. In 2024, Julong Copper will strive to achieve copper production of 0.1663 million tons. Currently, the second phase of the Julong Copper Mine renovation and expansion project has been approved. It is expected to achieve 0.3-0.35 million tons/year of copper production in the first quarter of 2026. The third phase of the project is being planned simultaneously. At that time, Phase 1, 2, and 3 can achieve copper production of 0.6 million tons/year. There is huge room for long-term growth of the mine, and the company is expected to continue to enjoy high returns.

Investment advice: The company is an important domestic manufacturer of potassium and lithium, and Julong Copper is expected to inject strong momentum into the company's growth. Considering that Mamicuo Mining has not yet been consolidated, we expect the company to achieve net profit of 2.5/2.77/4.29 billion yuan in 24-26, respectively, -27%, +11%, and +54.9% year-on-year, respectively. In 2025, the average valuation of comparable companies was 19 times. We gave the company a 19 times valuation in 2025, corresponding to a target price of 33.3 yuan. We covered it for the first time and gave it a “recommended” rating.

Risk warning: Potassium-lithium product price fluctuations; project commissioning falls short of expectations; internal corporate governance risks.