\u3000\u3000 Sichuan Yahua Industrial Group Co.Ltd(002497) (002497)
Event: on February 21, 2022, the company released the 2021 annual performance Express & the performance forecast for the first quarter of 2022. In 2021, the company achieved a revenue of RMB 5.233 billion, an increase of 61.0%, a net profit attributable to the parent company of RMB 925 million, an increase of 185.5%, a deduction of non attributable net profit of RMB 905 million, an increase of 202.7%, and a basic earnings per share of RMB 0.805/share, an increase of 139.4%. In the first quarter of 2022, it is expected to realize the net profit attributable to the parent company of RMB 900-1.2 billion, an increase of 1053.67% ~ 1438.22% at the same time, a ring increase of 208.0% – 310.6%, deducting the net profit not attributable to the parent company of RMB 894-1194 million, a ring increase of 204.2% – 306.3%. The profit of Q1 has exceeded the annual performance of 2021 and greatly exceeded the market expectation.
The civil explosive business continues to make progress while maintaining stability, and the price of lithium salt products continues to rise. Benefiting from the high demand for new energy in the downstream and the shortage of supply in the upstream, lithium salt prices have started a new round of rapid upward trend since December last year. Up to now, the prices of lithium carbonate and lithium hydroxide have risen to 450000 yuan / ton and 380000 Yuan / ton respectively, up 72.6% and 57.7% respectively compared with the beginning of the year. Under the high prosperity of lithium salt, the profitability of the company per ton has increased significantly. The company seized the opportunity to release production capacity and increase sales. The sales volume of lithium salt products gradually increased, and the profit of lithium business increased significantly.
Lithium salt production capacity expanded rapidly, and work together to Xtc New Energy Materials( Xiamen) Co.Ltd(688778) extend the development of lithium cathode materials. At present, the company has a production capacity of 43000 tons / year of lithium carbonate, lithium hydroxide and other lithium products. In 2021, the construction of a fixed increase project with an annual output of 50000 tons of battery grade lithium hydroxide, 11000 tons of lithium chloride and their products has been started. The phase I 30000 tons of battery grade lithium hydroxide production line is expected to be put into operation by the end of the year. It is expected that the comprehensive production capacity will exceed 100000 tons in 2025, and the capacity volume will double. Seizing the new opportunities of industry development and under the background of high demand for lithium iron phosphate, the company established a joint venture with Xtc New Energy Materials( Xiamen) Co.Ltd(688778) and cangya investment (Xiamen tungsten 83% / Yahua 10% / cangya 7%) to build a production line of lithium iron phosphate cathode materials with an annual output of 100000 tons by stages, so as to further transform resource advantages into economic benefits and open a new growth curve of the company.
The upstream lithium project was accelerated and the integrated layout of the industrial chain was continuously improved. 1) The company renewed the lithium concentrate off take agreement with Galaxy lithium, extended the procurement period for three years to 2025, and the annual procurement volume shall not be less than 120000 tons; 2) The Lijiagou Lihui 170000 ton lithium concentrate mining and beneficiation project developed in cooperation with Sichuan New Energy Power Company Limited(000155) is expected to be put into operation in the second half of this year, and will give priority to the production of Guoli after it is put into operation; 3) The construction of the Finnis lithium mine project under corelithium started as planned. It is expected to provide lithium concentrate to the company in the fourth quarter. The company signed a supplementary agreement on the basis of the previous purchase agreement of 75000 tons per year, and adjusted the reference price and maximum price of lithium concentrate in the original agreement, so that the company’s lithium concentrate can obtain a greater cost advantage; 4) Yahua lithium, a wholly-owned subsidiary, subscribed for 9.5% shares of EV company in Australia and jointly developed its Xiaohe, weinbeni & East Alps lithium mine project; 5) Cooperate with Eastern iron industry to develop trigghill project and enjoy the priority of product procurement.
Optimistic about the company’s future double main business growth and maintain the “buy” rating: the company has officially connected with Tesla‘s long-term contract to prove the technical strength and product quality of Ya’an lithium industry. Lithium salt prices rose sharply. With the company’s fund-raising projects put into operation at the end of the year, the company cooperated with Xtc New Energy Materials( Xiamen) Co.Ltd(688778) to further extend the layout of downstream industrial chain, and the company has sufficient growth momentum. The net profit attributable to the parent company from 2021 to 2023 was raised to 945 million yuan, 4246 million yuan and 6645 million yuan (the original expectation was 932 million yuan, 1397 million yuan and 1655 million yuan), and the corresponding PE was 39.6/8.8/5.6 times respectively (the original expectation was 40.2, 26.8 and 22.6 times), maintaining the “buy” rating.
Risk tips: the project progress is less than expected, the demand for new energy vehicles is less than expected, the Sichuan Tibet railway construction brings less than expected business increment to the company, the risk of civil explosion market policy change, etc.
