Tianqi Lithium Corporation(002466) (002466)
Leading lithium resources and building high barriers to competition. The company’s understanding of the long-term strategic position and importance of lithium resources is far ahead of peer enterprises, and actively put it into action. It began to layout high-quality lithium resources in the early development of lithium industry. Before the start of the last cycle of lithium price, the company acquired talison lithium, the world’s best spodumene mine, participated in Zabuye Salt Lake, China’s best Salt Lake, and controlled Cuola spodumene mine in Yajiang, Sichuan. After that, it acquired sqm equity at a high level in the last cycle. Although it brought a serious debt crisis to the company, the current crisis has been basically relieved. From the current constraints of lithium resources on the development of the lithium industry and the crazy competition for lithium resources in the market, the company’s past lithium resource mergers and acquisitions are the landing of the company’s deep cognition. With this round of super business cycle of the lithium industry, the company has entered the cognitive cashing stage. At the same time, the company has formed a long-term high competitive barrier.
Layout the world’s best spodumene and salt lake resources. Talison greenbushes spodumene mine controlled by the company has been operating continuously for more than 20 years. With the advantages of rich reserves and high grade, it has become the spodumene mine with the lowest cost in the world. At present, the capacity of lithium concentrate is 1.34 million tons / year, and the capacity is expected to be expanded to 1.64 million tons / year in 2022. In the long term, with the expansion of phase III and phase IV, the capacity of lithium concentrate will reach 2.5 million tons / year. In addition, Atacama Salt Lake under sqm, in which the company shares, is the world’s highest quality salt lake lithium resource, with a very low ratio of magnesium to lithium. It is expected that the capacity of lithium carbonate will reach 180000 tons in 2022, accounting for 23.75% of the company’s equity, and the long-term equity investment income is expected to continue to grow. In addition, the company owns Cuola spodumene mine in Yajiang and Zabuye Salt Lake in Tibet as resource reserves. The total equity resources are about 14.96 million tons of LCE.
Lithium salt capacity expansion is expected to accelerate. At present, the company has an annual capacity of 44800 tons of lithium compounds, including 34500 tons of lithium carbonate, 5000 tons of lithium hydroxide, 4500 tons of lithium chloride and 800 tons of metal lithium. The 24000 T / a lithium hydroxide of quinana phase I in Australia is expected to be put into operation in March 2022, and the lithium compound capacity will increase by more than 50%. Meanwhile, the company’s 24000 T / a quinana phase II lithium hydroxide project and 20000 t / a Suining Anju lithium carbonate project are under construction. In the future, with the improvement of the company’s cash flow, the investment and construction progress will be accelerated, and the total production capacity will reach 110000 T / a after putting into operation.
The debt crisis is lifted and the leading King returns. In 2018, the company raised US $3.5 billion to acquire sqm equity at the high point of the lithium industry cycle, laying a hidden danger of debt crisis. Since Q4 of 2020, with the extension of syndicated M & a loan, the introduction of strategic investor by overseas wholly-owned subsidiary tlea, the completion of Igo transaction, and the financial support provided by the controlling shareholder Tianqi group to the company, coupled with the rise of lithium price due to the gradual recovery of lithium industry, the company’s operating cash flow has been alleviated, and the current debt crisis has been basically relieved. Later, the company will repay the remaining loans through H-share issuance. The lifting of the debt crisis and the rise of lithium price caused by the demand super cycle of lithium industry, the company’s operating cash flow has gradually improved, the capacity expansion or acceleration, and the performance is expected to return strongly.
Lithium prices are still in the upward stage of the super cycle. In 2020, Q3 lithium carbonate price hit the bottom and reversed. Driven by the peak consumption season of new energy vehicles, Q4 lithium price experienced the first wave of accelerated rise in this super cycle, and the price of electric carbon rose to 90000 yuan / ton; In the first half of 2021, the price of lithium was maintained at about 90000 yuan / ton. Q3 started the second wave of accelerated rise as new energy vehicles entered the peak consumption season, reaching a record high of more than 180000 yuan / ton; Since Q4, the lithium price has operated steadily at RMB 190000-200000 / ton, and the third round of accelerated rise was started at the end of November. In 2022, we expect that lithium supply and demand will remain in a tight balance, the industrial chain will continue to maintain a low inventory level, and lithium prices still have considerable time and space to rise.
Profit forecast and investment rating: in combination with the release rhythm of the company’s lithium resources and lithium salt capacity, the growth rate of industry demand and the judgment of lithium price, we expect the company’s net profit attributable to the parent company from 2021 to 2023 to be 1.124, 6.247 and 9.562 billion yuan respectively, EPS to be 0.76, 4.23 and 6.47 yuan / share respectively, and PE corresponding to the current stock price to be 145x, 26x and 17x respectively. Considering that the company is a global leading enterprise in the lithium industry, sitting on high-quality spodumene resources and salt lake resources, and the production capacity of quinana lithium hydroxide is about to be put into operation, and the lithium battery industry in which the company is located is in the stage of rapid growth, which is covered for the first time, the company is rated as “buy”.
Stock price catalyst: lithium price continues to rise; The company’s performance growth exceeded expectations.
Risk factors: ① our profit forecast is based on the production of quinana lithium hydroxide phase I in March. If it is not on schedule, it will have a significant impact on the profit. Please pay attention to the risk of reaching the production schedule; ② Our profit forecast is based on the maintenance of the current price level of lithium. Please note the risk of falling lithium price due to the faster than expected capacity expansion of lithium resources enterprises or the slower than expected demand growth of new energy vehicles; ③ The company’s M & a loan of USD 1.868 billion remains to be repaid, of which USD 668 million will expire on November 25, 2022. Please note that the failure to repay the debt in time will lead to debt liquidity risk. The company plans to reduce its liabilities through H-share issuance in the future, and it is necessary to closely track the financing progress; ④ Impact risk of policy changes on sqm equity investment after Chile’s general election
