\u3000\u3 China Vanke Co.Ltd(000002) 738 Sinomine Resource Group Co.Ltd(002738) )
The leader of geological exploration turned to rare light metals, and the profitability increased rapidly
Sinomine Resource Group Co.Ltd(002738) started with geological exploration. Through three important acquisitions, the company gradually transformed into lithium salt + cesium rubidium. China color mining is the largest shareholder, and seven people including Wang Pingwei and Liu Xinguo are the actual controllers. The company is a leader in the geological exploration industry. It uses the first mover advantage to intervene in mining right investment and look for high-quality resources. The company has 78 mining rights, 35 mining rights, 43 exploration rights, 4 mines and rich resource reserves. The two mergers and acquisitions realized business transformation and upgrading, and the company's performance improved significantly after consolidation. In 2021q3, the company achieved revenue and net profit attributable to the parent company of 1.395 billion yuan and 302 million yuan, with a year-on-year increase of + 69.43% and 200.72%. Rare metals support the company's profits, and the gross profit is far ahead of other businesses. In 2020, the gross profit will reach 398 million yuan, accounting for 74% of the total gross profit.
Lithium salt sector: lithium resources bloom in many places, with a strong overweight of lithium battery track, and the leading position of lithium fluoride is stable
Bikita + Tanco dual resource guarantee, rapid release of production capacity. The company's lithium salt layout is divided into three steps: the first step: 25000 tons of lithium salt new capacity projects reach production capacity, and enjoy the dividend of lithium price rise. Step 2: ensure the supply of lithium resources and improve the self-sufficiency rate of raw materials. Bikita was acquired in 2022 to strengthen the layout of lithium resources. Affected by the epidemic and the sale of mines, bikita's performance fluctuated greatly in the past two years, and it is expected to revitalize resources after the acquisition of China Mining Corporation. Step 3: capacity expansion planning. We expect that Tanco will have a beneficiation capacity of 210000 tons this year, about 4000 tons of LCE; There will be 300000 tons of beneficiation capacity in 23 years, which can be converted into 6000 tons of LCE. Bikita will have a beneficiation capacity of 700000 tons, corresponding to 700000 tons of lithium concentrate, equivalent to 4 Jointo Energy Investment Co.Ltd.Hebei(000600) 0 tons of LCE; It has a beneficiation capacity of 1.75 million tons in 23 years, equivalent to about 260 Xinjiang Tianshun Supply Chain Co.Ltd(002800) 0 tons of LCE of lithium carbonate. In order to give full play to the advantages of lithium resource reserves and lithium salt processing technology. Invest 1 billion yuan to build a new lithium salt project with an annual output of 35000 tons, and the lithium salt production capacity will reach 60000 tons.
High quality customers + capacity expansion, and the leading position of lithium fluoride is stable Sinomine Resource Group Co.Ltd(002738) lithium fluoride expanded to 6000 tons / year, with the first market share. Through the supply of Japanese Morita chemical, the company has stably supplied to Tesla supply chain, with high-quality customer resources. Lithium fluoride has a high gross profit margin, supporting the profits of the lithium sector. In the first three quarters of 2021, the profit contribution of lithium salt was 27%, mainly from lithium fluoride.
Cesium rubidium sector: monopolize high-quality resources, create an industry hegemony, and cash cows escort the development of the company
Cesium and rubidium are widely used, but the resource distribution is relatively concentrated. The Tanco mine owned by the company is the only main mine available for mining in the world. Therefore, the company has mastered more than 80% of the proven reserves of cesium mineral resources in the world, and the compound growth rate of production and sales reached 24.3%. At the same time, the company is also the only global supplier of cesium formate, and a large contract with India is imminent. Cesium rubidium has high gross profit margin and strong profitability. In 2020, the gross profit margin of cesium rubidium products will reach 68.69%. With the booming downstream market, the gradual opening of the Chinese market and the increase in the order volume of cesium formate, the cesium salt business is expected to increase by 30% year-on-year in the future.
Investment advice
We expect that from 2021 to 2023, the company will achieve revenue of 2.25 billion yuan, 10.85 billion yuan and 10.64 billion yuan respectively, and net profit attributable to the parent company of 540 million yuan, 3.21 billion yuan and 4.54 billion yuan respectively, with a year-on-year increase of 210%, 494% and 41% respectively.
Cesium rubidium, as an important support for cash flow and profit, provides the company with a margin of safety for development. The insightful and down-to-earth lithium mine M & A + lithium salt capacity expansion fully enjoy the current high prosperity dividend of the industry. The professional and deep-rooted geological exploration team enables the company to find and buy Minerals. We believe that the company's performance will usher in another round of rapid improvement. From 2021 to 2023, the PE of the company corresponding to the current market value was 56x, 9x and 7x respectively. While the recent stock price performance was good, it still maintained a low valuation level, which was a good opportunity for layout.
Risk tips
The production progress of lithium mine is less than the expected risk, the production capacity release of lithium salt is less than the expected risk, the price of lithium salt and cesium salt falls sharply, and the acquisition progress of bikita project is less than the expected risk.
