Event description
The company released the mid-year report of 2022, achieving operating income of 7.776 billion yuan, year-on-year + 443.22%; net profit of 3.512 billion yuan, + 1023.42%; and deduction of non-return net profit of 3.501 billion yuan, + 1229.76% of the same period last year. 2022Q2 realized operating income of 4.388 billion yuan, year-on-year + 474.78%, month-on-month + 29.52%, net profit of 1.993 billion yuan, year-on-year + 1097.49%, month-on-month + 31.29%, and non-return net profit of 1.989 billion yuan, + 1207.62% and + 31.46%.
Event comment
The rise in the volume and price of lithium materials has promoted a substantial increase in performance: 2022H1's lithium materials business achieved an operating income of 7.212 billion yuan, an increase of 720.89% over the same period last year, accounting for 92.76% of the total operating income, which is the core support of the company's performance. Driven by strong demand downstream, the company's lithium materials business production and sales are booming, while the company's product prices have increased significantly compared with the beginning of the year. According to Shanghai Nonferrous net data, the average taxable price in June 2022 is 4063 million yuan / ton, up 60.53% from the average untaxed price in January 2022. 2022H1's lithium materials business achieved a gross profit margin of 78.8%, an increase of 37.67pct over the same period last year, accounting for 96.99% of the total gross profit. It is expected to maintain a high gross profit margin in the context of high lithium prices. During the reporting period, the company continued to increase the mining efforts of new customers of anti-static ultra-clean technology products in order to open up new markets, and the anti-static business and medical device business developed steadily.
The cash flow improved significantly and the operation and management efficiency improved significantly: the net cash flow generated by 2022H1's operating activities was 4.185 billion yuan, an increase of 5849.97% over the same period last year, mainly due to the substantial increase in the company's operating profit, short credit period and timely collection of accounts receivable. The company continues to optimize its internal operation and management system, and the scale effect brought about by the expansion of product scale shows. The cost during the company period is well controlled. The expense rate of 2022H1 company is 3.03%, year-on-year-6.19pct, of which sales expense rate is 0.36%, year-on-year-1.04pct; management expense rate is 1.97%, year-on-year-2.37pct; financial expense rate is 0.32%, year-on-year-1.08pct The rate of R & D expenditure is 0.39%, which is-1.71% compared with the same period last year.
The superimposed production capacity of resource guarantee was gradually released, and the scale effect was highlighted: 2022H1's overall gross profit margin was 75.36%, an increase of 35.99% over the same period last year. As early as the end of 2019, the company invested in upstream lithium resources company and signed a long-term procurement agreement to achieve forward-looking layout of lithium concentrate resources discharge (Pilbara/AMG price advantage lithium concentrate underwriting agreement + sufficient concentrate inventory), compared with the industry raw material procurement cost advantage. At the same time, the company's smelting capacity was gradually released, and the second phase of battery-grade lithium hydroxide, a subsidiary of Tianyi Lithium Industry, was put into production in the first half of the year, expanding the overall product scale and highlighting the scale effect. The company maintains a long-term and stable cooperative relationship with downstream customers, with full orders on hand, strong customer stickiness and the expansion of production and marketing scale, helping the company's performance to rise rapidly.
The demand for new energy downstream continues to be high, and it is expected that the price of battery-grade lithium hydroxide will remain high in the second half of 2022. With strong financial strength, excellent management mechanism and strong R & D strength, the company will continue to maintain many advantages in capacity expansion, lithium resources guarantee, downstream customer resources and so on. While the overall product scale expands rapidly, the company maintains a strong control over profitability. The company's performance is expected to maintain a high growth rate, highlighted by Alpha. From 2022 to 2024, the company is expected to achieve a net profit of 6.282 billion yuan and 6.643 billion yuan, corresponding to PE of 7.20X and 6.81X respectively, maintaining a "buy" rating.
Risk hint
1. the progress of production expansion is not as expected.
2. The demand for electric cars is lower than expected, and the price of lithium has dropped sharply.