\u3000\u3000 Yongxing Special Materials Technology Co.Ltd(002756) (002756)
Event: on January 26, Yongxing Special Materials Technology Co.Ltd(002756) issued an announcement and signed a joint venture agreement with Contemporary Amperex Technology Co.Limited(300750) . The two sides plan to establish a joint venture to jointly invest in the construction of lithium carbonate project and carry out cooperation in related product fields.
Establish a joint venture with the downstream leader of lithium battery to develop lithium carbonate project. According to the agreement, the registered capital of the joint venture is 1 billion yuan, of which Contemporary Amperex Technology Co.Limited(300750) or its related parties hold 70% and Yongxing Special Materials Technology Co.Ltd(002756) holds 30%. In terms of lithium carbonate project, the total investment of the project shall not exceed 2.5 billion yuan, and the investment of phase I project shall not exceed 1.5 billion yuan; The joint venture plans to build 6 million tons of mining and beneficiation capacity and 50000 tons of lithium carbonate capacity projects. The annual capacity of lithium carbonate phase I project is 30000 tons, and the construction of surplus capacity will be started after it is completed; The raw material supplier of the joint venture is Contemporary Amperex Technology Co.Limited(300750) or its affiliates, and 100% of lithium carbonate products are preferentially supplied to Contemporary Amperex Technology Co.Limited(300750) or its designated party. In terms of lithium carbonate product cooperation, Huaqiao mining industry in Yifeng county has the raw materials required to ensure the production of Yongxing Special Materials Technology Co.Ltd(002756) . The 20000 ton lithium salt capacity under construction is mainly supplied to Contemporary Amperex Technology Co.Limited(300750) or its designated party, and the purchase price is given appropriate preferential treatment based on the market price under certain conditions.? The lithium battery industry has a high outlook, with both volume and price rising, driving the company’s profits to increase greatly. In 2021, the rapid development of new energy vehicle industry chain led to a significant increase in lithium salt demand. Due to the small supply elasticity of upstream lithium resources, the price of battery grade lithium carbonate continued to rise during the year. According to the data of Baichuan Yingfu, the quarterly average price of battery grade lithium carbonate in China in 2021 increased from 74377.99 yuan / ton in Q1 to 209160.33 yuan / ton in Q4, an increase of 181%. According to the performance forecast, Yongxing Special Materials Technology Co.Ltd(002756) it is expected to realize a net profit attributable to the parent company of 87.20298 million yuan – 92.36292 million yuan in 2021, with a year-on-year increase of 238.00% – 258.00%; The net profit attributable to the parent company after deduction was 752.582 million yuan – 788.6865 million yuan, with a year-on-year increase of 316.00% – 336.00%; The net profit attributable to the parent company in 2021q4 was about 347 million yuan, up about 40.3% month on month. Under the high prosperity of the industry, the volume and price of battery grade lithium carbonate rise together, and the production and sales volume are booming, driving the company’s profitability to improve significantly, which is the main profit growth point.
Lithium mica ore has high self-sufficiency rate and stable expansion of smelting capacity. Yongxing Special Materials Technology Co.Ltd(002756) mica lithium extraction technology is leading in China. In terms of resources, lithium mica has a high self-sufficiency rate and has multiple advantages in resources, cost and technology. In terms of smelting, the first phase of the company’s lithium carbonate project with an annual output of 10000 tons reached production in July 2020, and the second phase of the project with an annual output of 20000 tons was started in February 2021. It is expected to be put into operation in the first half of 2022, and the capacity expansion is advancing steadily. In terms of resources, the company’s 1.2 million T / a beneficiation project and the 500000 T / a (up to 600000 T) beneficiation expansion project of Yongcheng lithium industry have reached production capacity, the new 1.8 million T / T beneficiation project has obtained environmental impact assessment, and the plant infrastructure is under construction, and the supporting 3 million T technological transformation and expansion mining project is under expansion and approval. At present, the company’s own mineral resources can support the annual production capacity of 50000 tons of lithium carbonate. This agreement also mentioned that Huaqiao mining will ensure the supply of raw materials required for Yongxing Special Materials Technology Co.Ltd(002756) . The self-sufficiency rate of lithium mica mine is high, and the impact of purchased materials on the cost is gradually reduced.
Strong forces work together to expand incremental business and open up new space for growth. The 6 million tons of mining capacity of the newly established joint venture is mainly contracted for the operation of some mines of Contemporary Amperex Technology Co.Limited(300750) . The raw materials of the lithium carbonate project are provided by Contemporary Amperex Technology Co.Limited(300750) , which has no impact on the original ore reserves of Yongxing Special Materials Technology Co.Ltd(002756) . It is an incremental business, increasing the company’s 15000 tons of equity capacity. The joint venture company can make full use of the leading advantages of both parties in the upstream and downstream of lithium battery industry, give full play to Yongxing Special Materials Technology Co.Ltd(002756) ‘s construction experience in mining and smelting, improve the market share and popularity of the company in lithium carbonate market, and consolidate the leading position of mica in lithium extraction.
Investment suggestion: with Yongxing Special Materials Technology Co.Ltd(002756) experience and advantages in the construction of lithium mica mining and processing and mica lithium extraction industrial chain, the joint venture project is expected to achieve rapid production and consolidate the leading position of the company; The in-depth cooperation and close linkage between the company and downstream leading enterprises help to track the latest needs of downstream enterprises for technological innovation of lithium salt products in real time, and further improve the competitiveness of electric carbon products. Under the background of tight supply of lithium salt resources, the company’s high self-sufficiency mine end guarantee, steadily expanding smelting capacity and continuously optimizing technical advantages will help to accelerate the release of performance. It is estimated that the company’s net profit attributable to shareholders of listed companies from 2021 to 2023 will be RMB 911 million, RMB 3464 million and RMB 4.037 billion, the corresponding EPS from 2021 to 2023 will be RMB 224 million, RMB 853 million and RMB 9.94, and the corresponding PE from 2021 to 2023 will be 52X, 14x and 12x, giving a “recommended” rating.
Risk tips: 1) the downstream demand for lithium salt has shrunk significantly; 2) Lithium salt prices fell sharply; 3) The construction progress of the company’s new project is less than expected.
