Main points of investment
Event: in the first half of 2022, the company achieved operating income of 2.075 billion yuan, an increase of 25.07% over the same period last year, a net profit of 161 million yuan, an increase of 107.37% over the same period last year, and a net profit of 132 million yuan, an increase of 104.05% over the same period last year, in line with our expectations.
The lithium cycle continues to increase, and profits also increase by 177%. The operating income of 2022H1's lithium cycle business increased by 114.39% to 816 million yuan, with a gross profit margin of 31.99%, which is the same as minus 5.39pct. Jintai Pavilion, the core subsidiary of lithium cycle, continued to grow. 2022H1 Jintai Pavilion achieved an operating income of 812 million yuan, an increase of 45%, and a net profit of 213 million yuan, an increase of 177%. Tianqi Jintai Pavilion 2022H1 produces a total of 1451.65 gold tons of cobalt, manganese and nickel. The average recovery rate is 98%; the production of lithium carbonate is 986.30 tons, an increase of 31%, and the average recovery rate is 85%, ranking among the leading level in the industry.
The new production capacity of Jintai Pavilion, a core subsidiary, was put into production in the third quarter of 2022. In the second half of 2021, Jintai Pavilion launched a production expansion technical renovation project, which is expected to be gradually put into production in the third quarter of 2022. The overall production capacity of the company's lithium battery cycle plate is expected to be 12000 gold tons / year for cobalt, manganese and nickel and 5000 tons / year for lithium carbonate by the end of 2022.
The profit margin of the equipment manufacturing business is under pressure, waiting for profits to recover. The operating income of 2022H1's intelligent equipment business increased by 13.55% to 710 million yuan, with a gross profit margin of 15.94%, with a decrease of 4.10 pct; the company's intelligent equipment business signed an order of 1.003 billion yuan, of which new energy vehicle projects accounted for 59%, and vehicle resources are expected to empower lithium battery recycling business. The operating income of 2022H1's circular equipment business increased by 15.89% to 246 million yuan, with a gross profit margin of 13.12%, with a decrease of 11.14 pct; a new order of 314 million yuan was signed for circular equipment business. The operating income of 2022H1 heavy industry machinery decreased by 27.25% to 289 million yuan, the gross profit margin was 8.67%, and the same reduction of 6.30 pct; the company's heavy industry machinery business newly signed 247 million yuan.
2022H1 affected by the domestic epidemic, the gross margin space of the plate narrowed. The company continues to strengthen internal management, reduce costs and increase efficiency, timely adjust the procurement strategy, and look forward to the recovery of profitability.
Lithium cycle long slope thick snow, the company's rapid capacity expansion & accelerated channel layout. The lithium cycle has increased by 18% over the past 15 years, and the space of long slope and thick snow is nearly 300 billion in 2035. The production capacity of Jintai Pavilion will expand to 50,000 tons of waste ternary batteries in the second half of 2022, and the construction of the first phase of 150000 tons of waste lithium iron phosphate batteries is expected to be completed in the second quarter of 2023. The Longnan Economic Development Zone project will be dominated by waste lithium battery raw materials, forming a ternary precursor project of 30,000 tons per year and battery-grade lithium carbonate of 120,000 tons per year. Rapid expansion of production capacity and active layout of recovery channels, landing cooperation includes vehicle enterprises (FAW Group), Internet + e-commerce (JD.com technology), light vehicle lithium faucet (Xing Heng Power supply), battery-related financial technology service enterprises (Haitong Hengxin), automotive aftermarket service enterprises (Guangzhou Huasheng) to ensure project capacity utilization.
Profit forecast and investment rating: we maintain the previous forecast of 2022-2024 homing net profit of 349, 558 and 653 million yuan, corresponding to the 2022-2024 EPS of 0.92, 1.47 and 1.72 yuan respectively.
The current market capitalization corresponds to 23.9 / 14.9 / 12.8 times of PE in 2022-2024. Maintain a "buy" rating
Risk hint: sales of new energy vehicles are not as expected, the progress of the project is not as expected, and competition is intensified.