Event description
Tianhua Super net released its quarterly report for the first quarter of 2022. During the reporting period, the company realized operating income of about 3.388 billion yuan, an increase of about 407% over the same period last year, and a net profit of about 1.518 billion yuan, an increase of about 939% over the same period last year.
Event comment
Lithium materials business volume and prices rose, driving the company's performance explosive growth. On the production side, with the completion of the first phase of the technical transformation of the lithium industry in the 21st year, and the commissioning and climbing of the second phase of 25000 tons of lithium hydroxide capacity, the output of 22Q1 lithium hydroxide is expected to be close to 10,000 tons (75% equity production exceeds 7000 tons), which is expected to achieve the production and marketing target of 45000 tons for the whole year, double that of the same period last year.
On the price side, lithium prices continued to rise as demand fell short of supply. According to Asia Metal Network data, the average tax price of 22Q1 lithium hydroxide was 3567 million yuan / ton, up 523% from the same period last year. If measured according to the 50 million profit of the traditional business, the net profit per ton of 2022Q1 lithium salt is expected to be about 200000, reflecting the company's strong cost control ability.
Looking forward to 2022, the company's performance is expected to continue to increase in certainty, Alpha highlights. Under the extremely rapid smelting capacity expansion, Tianhua has prospectively made the resource layout and arrangement (Pilbara/AMG 's lithium concentrate underwriting agreement with price advantage + sufficient concentrate inventory), and the whole industry has an obvious advantage over the raw material purchasing cost. The lithium salt expansion project of the company's two major production bases in Yibin and Meishan is progressing smoothly. The 100000 tons of lithium carbonate smelting capacity of the company and Ningde in Yichun, Jiangxi Province, is expected to be put into production at the beginning of 23. The simultaneous construction of the three bases is expected to promote the rapid expansion of the company's lithium salt scale.
In the long run, Tianhua Times plans to complete delivery within 4 months of the 24% stake in Africa's largest spodumene Manono project. The Manono project plans to have a capacity of 700000 tons of lithium concentrate, and the underwriting company is expected to gain control of more than half of the capacity. In addition, the company has recently signed agreements with GL1 and Premier to obtain not less than 30 per cent of the 10-year option for the concentrate produced by the GL1 Western Australia lithium project (GL1 mainly operates the Marble Bar and Manna lithium projects, which can be increased by 15 per cent per year if GL1 agrees) and 50 per cent of the spodumene from Zimbabwe Zulu lithium tantalum mine. Strong leadership and financial strength is an important guarantee for the continuous landing of the company's strategic planning.
Assuming that the average price of lithium in 2022 and 2023 is 480000 / ton and 400000 / ton, the company is expected to achieve a net profit of 5.413 billion yuan and 6.195 billion yuan in 2022 and 2023, with a corresponding PE of 6.59X and 5.76X respectively, maintaining the "buy" rating.
Risk hint
1. Sales of new energy vehicles are lower than expected, and lithium prices fluctuate greatly.
2. The development of own resources is not as expected.