The company is a leading company in the protection industry. The company has formed a product structure which is mainly composed of functional labor protection gloves and supplemented by non-functional labor protection gloves. At present, the company has four categories, ten series and more than 200 varieties of dipping and dispensing labor protection gloves with lining PU, nitrile, latex, water-based PU glue and so on. It is one of the most professional enterprises in the domestic labor protection glove industry with the most product varieties / specifications. The company's performance has grown steadily. At present, the company's income is mainly contributed by traditional protection business, of which functional gloves are mainly functional gloves. In 2021, the revenue of functional gloves business is 864 million yuan, accounting for 82.1%, and gross profit is 196 million yuan, accounting for 82%.
The acquisition of Tiancheng Lithium Industry and the newly established Xiecheng Lithium Industry will quickly enter the lithium salt industry. The company already holds a 33.33% stake in Tiancheng Lithium Industry and plans to continue to acquire a 17.67% stake in Tiancheng Lithium Industry in order to realize its holding. Tiancheng Lithium Industry is a lithium sulfate solution manufacturer, which integrates lithium sulfate solution extraction, production, processing and sales, and provides users with lithium sulfate solution and other related products.
According to the acquisition agreement, the company has reached a bet agreement with Tiancheng Lithium Industry, requiring the latter to belong to the shareholders of the parent company after deducting non-recurring profits and losses in 2022, 2023 and 2024, respectively, no less than 180 million yuan, 200 million yuan and 210 million yuan, respectively. According to the company announcement, the production capacity planning of Tiancheng lithium industry can be converted into 10,000 tons of lithium carbonate per year. Based on the sales of 6600 tons of lithium sulfate solution in 2023, 7200 tons of lithium sulfate solution and other related products (lithium carbonate equivalent) and the price of 133900 yuan / ton in 2024-2027, it corresponds to 884 million yuan in 2023 and 964 million yuan in 2024-2027. As Xiecheng Lithium Industry already has an annual output of 6000 tons of lithium carbonate and 6000 tons of lithium hydroxide transferred from Tiancheng Lithium Industry, as the downstream of Tiancheng Lithium Sulfate Mother Liquor, it may form a good synergistic effect with Tiancheng Lithium Industry in the future.
Resources first, participate in Bougouni and get the right to underwrite KODAL. The company indirectly holds 7.23% of the Bougouni project through Taian Xinchang. The company and its wholly-owned subsidiary Jin Hao Xin material indirectly own the interest in the spodumene project in Bougouni, Mali, Africa, through the transfer of 100% property share of Taian Xinchang, and underwrite not less than 80% of the lithium concentrate products with KODAL for a period of three years (with the priority right to renew the contract after expiration), the price refers to the market price of the products with the same physical and chemical properties. The concentrate production capacity of the Bougouni project is 238,000 tons per year, and the economic benefit is good.
According to PFS, the capital expenditure of the project is US $154 million, the processing capacity of the concentrator is 2 million tons of raw ore / year, the corresponding concentrate capacity is 238000 tons of SC6/ years, the average lithium yield is 74%, the project has a life of at least 8.5 years, the whole life cycle will produce 2.024 million tons of lithium concentrate, and the average cash cost is US $474 / ton (plus royalties and maintenance fees is US $520 / ton) The average price of the concentrate is 1060 US dollars / ton, the whole life cycle income is about 2.145 billion US dollars, the expected investment payback period is 0.8 years, and the internal rate of return is 91.2 per cent.
Investment suggestion: from 2022 to 2024, we estimate that the company's operating income will be 15.8,32.84 and 4.368 billion yuan respectively, and the net profit will be 1.68,3.2 and 397 million yuan, respectively, and the corresponding EPS will be 1.05,1.99,2.47 yuan per share, respectively. At present, the stock price will be 42.8,22.5,18.1 times of PE. For the first time, it was given a "overweight-A" rating with a 6-month target price of 56 yuan per share.
Risk hint: demand is lower than expected, lithium price fluctuates sharply, project progress is not as expected, and the estimated results are not as expected.