The company released its 2023 annual report
In 2023, the company achieved revenue of 21.579 billion yuan, -29.80% year-on-year. Net profit attributable to mother for the full year of 2023 was 7.914 billion yuan, or -49.17% year-on-year; net profit after deducting non-return to mother was 8.724 billion yuan, or -43.15% year-on-year. Among them, Q4 2023 revenue was 5.789 billion yuan, -19.67% YoY, -0.79%; net profit to mother was 2,314 billion yuan, -33.56% YoY and +360.67% month-on-month; net profit net not attributable to mother was RMB 3,219 billion, -2.15% YoY and +599.65% month-on-month.
The potash fertilizer and lithium salt business contributed to the main profit, and gross margin declined year on year? In terms of revenue, the total revenue of the potash fertilizer and lithium salt business in 2023 was 146.18 billion yuan and 6.361 billion yuan, respectively, -15.51% and -44.49% year-on-year, accounting for 67.74% and 29.48% of revenue respectively.
In terms of gross profit, the gross profit of the potash fertilizer and lithium salt business in 2023 was 7.502 billion yuan and 4.608 billion yuan, respectively, decreasing by 45.4% and 56.28% year-on-year. In terms of gross margin, benefiting from the price boom of main products, the gross margin of the potash business fell 28.1 pct to 51.32% year on year, and the gross margin of the lithium salt business fell 19.51 pct to 72.45% year on year.
The cost advantage of lithium extraction in salt lakes is prominent, and potash fertilizer production and sales remain stable
Lithium salt: (1) Volume: Production and sales of lithium carbonate in 2023 were 361 and 37,600 tons, respectively, with stocks of 0.26 million tons in 2023. (2) Price: In 2023, the company sold 169,200 yuan/ton for a single ton of lithium salt, and the average tax-inclusive price of SMM battery-grade lithium carbonate in 2023 was 258,800 yuan/ton, which is lower than the average market price. (3) Cost: In 2023, a single ton of lithium salt costs 48,600 yuan/ton, gross profit of 122,600 yuan/ton per ton, with a relatively large profit margin.
Potash: (1) Volume: Potash fertilizer production and sales in 2023 were 492 and 5.6 million tons in that order, +13.33% and -15.07% year-on-year, with inventory of 672,400 tons in 2023. (2) Gross profit: In 2023, the company's sales price, cost and gross profit of a single ton of potash fertilizer were 2,610, 1,444, and 1,165 yuan/ton in that order.
New construction projects are progressing steadily, and lithium salt production capacity continues to expand
According to the company's 2023 annual report, the company currently has a potash fertilizer production capacity of 5 million tons/year, with a capacity utilization rate of 100%; lithium carbonate production capacity is 30,000 tons/year, with a capacity utilization rate of 100%. The new 40,000 ton basic lithium salt integration project is expected to be completed by the end of 2024. At that time, the company's annual lithium carbonate production capacity will further increase.
The company continues to make efforts to coordinate the high-quality development and utilization of salt lake resources, enhance resource security capabilities and enhance sustainable development. In terms of lithium, the company's salt lake lithium extraction technology has a cost advantage. Lithium prices have fluctuated to the bottom, and the space below is limited. In terms of potassium, transportation costs for imported potash have risen due to geological events, etc., production capacity for new potash fertilizer at home and abroad is limited, there is great uncertainty about production recovery in Russia and Belarus, and the supply side may be tight. Meanwhile, the demand side is expected to maintain a high growth rate as the economy recovers, and the potash price center is expected to move upward, or help release the company's performance.
Investment advice:
The company's 2024-2026 revenue is estimated to be 191.21, 222.66, and 25.973 billion yuan, respectively, with net profit of 75.20, 85.71 billion yuan, and 110.34 billion yuan, corresponding EPS of 1.38, 1.58, and 2.03 yuan/share, respectively. Currently, the corresponding PE price is 11.9, 10.5, 8.1 times, maintaining the “increase holding-A” rating, and maintaining a target price of 27.0 yuan/share for 6 months.
Risk warning: lithium prices fluctuate greatly, demand falls short of expectations, and project progress falls short of expectations