\u3000\u3000 Chengxin Lithium Group Co.Ltd(002240) (002240)
Investment Event: the company released the performance forecast for 2021. In 2021, the company is expected to realize a net profit attributable to shareholders of listed companies of RMB 830 million-920 million, with a year-on-year increase of 2954.31% - 3285.50%; It is estimated that the net profit attributable to the shareholders of the listed company after deducting non profits is 848 million yuan - 938 million yuan, with a year-on-year increase of 472.96% - 512.55%.
The accelerated rise of lithium price helped the company's Q4 performance release significantly. In the single quarter of 2021q4, the company expects to realize a net profit attributable to the parent company of 292 million yuan - 382 million yuan, with a month on month increase of 18.2% - 54.66%. During the reporting period, due to the high prosperity of downstream new energy and the continuous shortage of lithium salt supply, product prices accelerated. The prices of battery grade lithium carbonate and lithium hydroxide in China increased from 185300 yuan / ton and 186300 yuan / ton at the beginning of October 2021 to 282400 yuan / ton and 234300 yuan / ton at the end of December; In 2021q4, the average price of battery grade lithium carbonate in China reached 209200 yuan / ton, up 377.11% year-on-year and 72% month on month; The average price of battery grade lithium hydroxide reached 201500 yuan / ton, up 252.49% year-on-year and 54.22% month on month.
Lithium salt production capacity is gradually put into operation and released to determine the future growth of the company. At present, Zhiyuan lithium, a subsidiary of the company, has built a capacity of 25000 tons of lithium carbonate and 15000 tons of lithium hydroxide; The 30000 ton lithium hydroxide capacity of Suining Shengxin, a subsidiary, has been put into operation on January 18, 2022, officially ignited and put into trial production; The first group of 150 ton capacity has been built for the 600 ton metal lithium project of Shengwei lithium industry, a subsidiary, and the remaining capacity is also under active construction; Through a joint venture with stellar in Indonesia, the company invests in the construction of a project with an annual output of 50000 tons of lithium hydroxide and 10000 tons of lithium carbonate in morowali Industrial Park (IMIP), which is expected to be put into operation in 2023. In terms of customers, the company has established stable cooperative relations and signed long-term supply agreements with industry-leading enterprises such as Contemporary Amperex Technology Co.Limited(300750) , Xiamen Tungsten Co.Ltd(600549) , Shanshan energy, LGI, beiteri, Shenzhen Dynanonic Co.Ltd(300769) , Beijing Easpring Material Technology Co.Ltd(300073) , Ningbo Ronbay New Energy Technology Co.Ltd(688005) .
The resource side layout makes efforts to ensure the smooth release of long-term capacity performance. The subsidiary oyno mining (holding 75%) has a production capacity of 405000 tons of raw ore, equivalent to 75000 tons of lithium concentrate; In addition, oino also owns the detailed exploration right of taiyanghekou lithium Polymetallic Mine. By investing in Qicheng mining and shengtun lithium industry, a wholly-owned subsidiary, and purchasing 100% equity of Sichuan Liuxin survey planning and Design Co., Ltd., oino indirectly obtained 25% of the equity resource reserves under the exploration right of Sichuan Yajiang Murong lithium mine. After preliminary exploration, it has 39.436 million tons of ore resources and 642900 tons of lithium oxide, The average grade is 1.63%; The company signed 60000 T / A and 120000 T / a lithium concentrate underwriting agreements with mtcatlin and avz mining (Manono); The company has acquired 51% equity of maxmind, and its wholly-owned subsidiary owns mining warrants for 40 rare metal ore blocks of sabixing Lithium Tantalum mine project in Zimbabwe. Among them, the main mineral Li2O resources of 5 mining rights are 88500 tons, and the associated Li2O resources are 5200 tons, and the other 35 mining rights are in the preliminary preparation stage of exploration; Through the acquisition of Huayou international mining, SESA has the right to operate the sdla project in Argentina. At present, the production capacity of the project is 2500 tons of lithium carbonate equivalent. With the gradual advancement of mine exploration and mining, it is expected that the company's resource reserves will be gradually realized, so as to improve its own resource self-sufficiency rate and ensure the release of the company's smelting capacity in the future.
Investment suggestion: with the gradual construction and production of capacity in Suining, Sichuan and Indonesia, the company's lithium salt capacity is expected to enter the first-line position in the industry. At the same time, the company continues to increase the resource layout and consolidate the self-sufficiency of lithium resources. On the basis of yelonggou lithium mine, with the promotion of exploration and mining of sabixing lithium mine in Zimbabwe and Murong lithium mine in Sichuan and the production of new lithium mines, the improvement of the company's resource support capacity will help the smooth release of lithium salt production capacity and effectively realize the strategic design of lithium salt integrated in-depth layout. It is estimated that the company's net profit attributable to shareholders of listed companies from 2021 to 2023 will be RMB 885 million, RMB 1942 million and RMB 2273 million, corresponding to EPS of RMB 102, RMB 225 and RMB 2.63 from 2021 to 2023 and PE of 47x, 21x and 18x from 2021 to 2023, maintaining the "recommended" rating.
Risk tips: 1) the downstream demand for lithium salt has shrunk significantly; 2) Lithium salt prices fell sharply; 3) The release of new production capacity of the company is less than expected; 4) The company's lithium concentrate resources are in short supply.
