Performance

On April 28th, the company released its quarterly report that the company achieved an operating income of 2.558 billion yuan, an increase of 330% over the same period last year, and a net profit of 213 million yuan, an increase of 252% over the same period last year.

Analysis

Lithium iron phosphate to maintain a high economy, superimposed inventory earnings, the company's lithium iron phosphate business increased significantly. The company achieved a net profit of 213 million yuan in the first quarter, a substantial increase compared with the previous quarter. The overall operation of the company is relatively stable, and the business has not been greatly affected by the epidemic. In the first quarter, the company's main product lithium iron phosphate still maintained a high demeanor, while the first phase of the company's Sichuan base project was put into production in the first quarter, which led to a month-on-month increase in sales of lithium iron phosphate by more than 2000 tons and a steady increase in sales. at the same time, the price of lithium carbonate, the main raw material of lithium iron phosphate, was still in the rapid upward stage in the first quarter, and the company carried out part of the inventory of lithium carbonate in order to ensure safe operation. As a result, superimposed on the high product boom and inventory revenue, the company contributed to the core profit of lithium carbonate in the first quarter, resulting in a substantial growth.

Under the support of cost, the price of automotive urea increased slightly. Since the second half of 2021, due to the substantial increase in energy prices, the price of granular urea has increased significantly. As the main raw material of urea for vehicles, the cost pressure of products has increased. In the first quarter of this year, the price of granular urea is still at a high level. According to the average market price in Jiangsu, the price of granular urea increased by about 90 yuan / ton, while the average sales price of urea for vehicles increased by about 13 yuan / ton. In the first quarter, the company's automotive urea base has been put into production one after another, and the proportion of outsourced automotive urea has obviously declined in the first quarter. The base layout in many regions of the country is expected to gradually optimize the company's production and transportation costs. Automotive urea is expected to maintain relatively stable operation in the short term. New projects are expected to be put into production this year, and the layout of differentiated products is expected to enhance the competitiveness of the company's industry. Since last year, the company has continued to accelerate the production capacity layout of lithium iron phosphate, successively building lithium iron phosphate capacity in Sichuan, Shandong and other places, and building raw material iron phosphate capacity in Sichuan, Hubei and Shandong, accelerating market expansion. with the gradual production of many bases of the company this year, the company's quarterly output will be gradually increased, and the improvement of the industrial chain will further optimize production costs. On top of this, the company has also laid out iron lithium No. 1 products and manganese iron lithium products with good low temperature performance and fast charge and discharge performance, which form a differential supplement on the existing high pressure solid density products. in order to continuously enhance the company's market influence and competitiveness.

Investment suggestion

The company grasps the demand trend of lithium iron phosphate and speeds up production capacity construction. with the increase in production capacity, the company is expected to enter the development fast lane. It is predicted that the company's return net profit from 2022 to 2024 will be 768 million yuan, 904 million yuan and 1.006 billion yuan respectively, corresponding to 18, 16 and 14 times of PE.

The risk indicates that the construction process of new production capacity is not up to expectations, and the intensification of industry competition leads to the reduction of risk in industry profits.