Tianqi Lithium (002466) 2023Q1 Performance Review: Performance Increased Year Over Year

長江證券 ·  05/03  · Researches

Description of the event

The company achieved revenue of 11.449 billion yuan in 2023Q1, +117.77% year on year, -28% month on month; achieved net profit of 4.875 billion yuan, +46.49% year on year, -40% month on month; net profit of non-return to the mother was 4.836 billion yuan, +70.67% year on year, -41% month on month.

Incident comments

The company's profit in the first quarter surged year-on-year, exceeding the industry average. (1) The launch of the Terrison TRP project climbed, and production and sales of concentrated minerals increased sharply year-on-year in the first quarter. 2023Q1 lithium concentrate produced 356,000 tons, +32% year on year. (2) The company's average sales price of lithium compounds, derivatives, and chain ores in the first quarter increased by 40.47% and 245.09% year-on-year. (3) According to Bloomberg's forecast, the results for the first quarter of SQM2023 will increase significantly year-on-year, and the company's confirmed investment income in the associated company in this reporting period increased significantly compared to the same period last year. The company's total net investment income in the first quarter was 1,412 million yuan, -170 million over the previous year. (4) 202201 was affected by loss of fair value changes in forward options business and changes in SES equity investment accounting programs. The company deducted net profit from non-return to the mother +70.67% year on year.

Volume and price were under pressure, and the company's first-quarter performance declined sequentially. According to SMM2023Q1, the average prices of domestic battery-grade lithium carbonate and lithium hydroxide for batteries (tax included) are 400,000/ton and 440,000 tons/ton, respectively, -5% and +17% year on year, -28% and -20% month on month.

On Q1 of 2023, Greenbush was $2,616 million, and the company enjoyed a portion of net profit attributable to the mother of about $2.2 billion. 2023Q1 lithium concentrate produced 356,000 tons, -6% over the previous month, of which 327,000 tons of chemical-grade lithium concentrate and 28,000 tons of technical-grade lithium concentrate; sales volume was 336,000 tons, -13% month-on-month; the month-on-month decline in production and sales was mainly due to mill capacity utilization and port storage restrictions in February. The sales price of Q1 lithium concentrate is 5,783 US dollars/ton, and the Q2 price guide is 5,444 US dollars/ton. Converted to the cost of battery-grade lithium carbonate is about 340,000 tons/ton and 320,000 tons respectively (exchange rate 6.82, processing cost of 24,000/ton LCE, same below). The production cost of GreenBushQ1 (excluding equity) was 292 Australian dollars/ton, and the comprehensive cost (including equity) was 690 Australian dollars/ton, -9% from the previous quarter, converted to the full cost of battery-grade lithium carbonate about 49,800 million/ton LCE. The company's net investment income in the first quarter was 1,412 million yuan, -170 million yuan over the previous year and -4.7 billion yuan over the previous quarter. Due to poor procurement in the domestic lithium battery industry chain in the first quarter, sales may have declined month-on-month and accumulated stocks. The company's inventory level at the end of the first quarter was 3.155 billion, an increase of 1 billion over the end of '22.

Resource leaders have been growing strongly over the long term. (1) The sharp improvement in profits and the Hong Kong stock IPO have led to a sharp improvement in the company's financial situation. Low debt and abundant and continuous cash flow are expected to return the company to the fast track of horizontal and vertical expansion; (2) the company's own Greenbush production capacity reached 1.62 million tons. FY2023 guides lithium concentrate production to exceed 1.45 million tons, and there is still potential for strong expansion of production in the long term. As the domestic Yajiang Cuola development progresses in the future and potential lithium resource mergers and acquisitions, long-term resource reserves are further enhanced; (3) Recently, the company's lithium chemical processing capacity is planned to reach 110,000 tons, and is planned to reach 300,000 tons in 2027.

With the launch of domestic production capacity of 20,000 tons in the second half of the year and the gradual release of Nana, the company's lithium salt production is expected to gradually increase. In the short term, lithium prices are still showing a weak downward trend when suppressed by demand, but prices are gradually approaching the bottom range, and downstream inventories are close to historically low levels. With the gradual recovery of downstream demand and the resumption of procurement in the industrial chain, the overall operation of lithium enterprises is expected to warm up.

Optimistic about the long-term investment value of the company as a resource leader.

Risk warning

1. Demand for new energy fell short of expectations, and lithium prices fell sharply;

2. The commissioning of the company's project fell short of expectations.

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