Sichuan New Energy Power Company Limited(000155) (000155)
Analysis and judgment:
Lithium mine is highly dependent on foreign countries, and Lijiagou is expected to become the only Greenland hard rock mine project put into operation next year
Due to the lack of overall management and scientific planning and weak mine infrastructure, the development and utilization of advantageous lithium mines in Western Sichuan is slow and highly dependent on imports. China's dependence on foreign lithium mines has reached 85%. It is precisely because China's lithium mines are highly dependent on foreign countries, and when the industry is in a tight supply situation, the resource pricing power is completely controlled by overseas countries. As of December 15, the CIF price of lithium concentrate has risen to US $2310 / ton, an increase of 478% over the beginning of the year. The sharp rise in the price of lithium concentrate has led to a significant shift in the price increase profits brought about by the current round of supply shortage to upstream resources. Australia mine has basically shared 70% of the profits of the lithium ore + lithium salt processing industrial chain. At the same time, more importantly, there is no way to guarantee the safe supply of the industrial chain. As an important industry to achieve the goal of carbon neutralization in China, the electric vehicle industry is not independent and controllable, which is unfavorable to the long-term healthy development of the industry. Therefore, it is particularly important to accelerate the development of lithium resources in Sichuan. At present, there are only two lithium mines in Sichuan, and the production capacity is relatively small compared with overseas lithium mining enterprises. The annual output of Youngy Co.Ltd(002192) methyl card 134 pulse is about 70000 tons / year, and the annual output of Chengxin Lithium Group Co.Ltd(002240) Jinchuan aoyinuo mineral is about 70000 tons. The combined annual output of the two is about 20000 tons of lithium carbonate equivalent. The suspended dangba lithium mine and delanongba lithium mine are difficult to resume production for various reasons. Only the Lijiagou spodumene mine controlled by the company is under active construction and is expected to become the only Greenland hard rock mine project put into operation next year. Against the background of high lithium concentrate prices, Lijiagou lithium mine will form a positive profit contribution to the company after it is completed and put into operation.
Sichuan energy is expected to benefit from participating in phosphate rock to broaden the new energy industry chain and frequent actions of major shareholders
On October 28, the company announced that it planned to jointly invest with Sichuan Road & Bridge Co.Ltd(600039) , Byd Company Limited(002594) and Hefeng company to develop and construct the phosphate rock resources and lithium iron phosphate project in Mabian County, accounting for 20% of the company's investment, and has the priority distribution right of 20% of the joint venture's phosphate rock and products. The business development direction of the joint venture is positioned in the new energy storage industry based on phosphate rock resources, involving phosphate rock mining and smelting and lithium iron phosphate battery production and sales. Laoheba phosphate rock has the largest thickness and high grade, and is located in China's high-quality phosphate rock area. According to the work report of Mabian Yi county government in 2020, Mabian county has proven prospective reserves of 2.48 billion tons of phosphate rock, which is one of the four largest phosphate rocks in China. Phosphorus is an indispensable part of lithium battery materials. With the increasing demand for downstream lithium battery materials, the demand for phosphorus is also rising. At the same time, phosphate rock is also one of the national strategic mineral resources. The company indirectly enjoys phosphate rock resources through equity participation in the joint venture, which is of positive significance and promotion to the future development of the company, and is also in line with the development policy of the controlling shareholder and the layout of the whole lithium battery industry chain of the company. In addition, in the second half of this year, Sichuan energy investment signed strategic cooperation agreements with Shudao group, honeycomb energy and Contemporary Amperex Technology Co.Limited(300750) respectively, and held work discussions with Eve Energy Co.Ltd(300014) . As its only listed new energy industry operation platform, the company will have more cooperation in the new energy industry chain in the future. The company's industrial layout in lithium new energy will accelerate again and support the further growth of the company's performance.
Wind power and solid waste are the "shield" to help the "spear" development of lithium battery
On October 28, 2021, the company announced that the company's issuance of shares to purchase assets, raising supporting assets and related party transactions had been approved and approved by the CSRC. On November 16, it announced that chuanneng environmental protection had obtained the notice of approval of change of registration, and the industrial and commercial change registration procedures for the transfer of 51% equity of chuanneng environmental protection held by Sichuan energy investment to the company's name had been completed, The target company becomes the holding subsidiary of the company. Sichuan energy investment promises that the cumulative net profit of Sichuan energy environmental protection will not be less than 502 million yuan from 2021 to 2023, including 215 million yuan in 2021. The consolidation of solid wastes will bring stable cash flow contribution to the company. In terms of wind power, 175000 kW will be newly installed in 2021, with a total installed capacity of 922000 kW. Wind power has always been the main profit source of the company, and the scale of wind power has maintained stable growth every year, which is also expected to bring stable cash inflow. So far, the stable cash flow of wind power + solid waste is conducive to supporting the company's subsequent strategic expansion of lithium battery business, so as to achieve sustainable development.
Investment advice
As a state-owned enterprise in Sichuan, the company has completed the layout of upstream lithium ore + lithium salt, and has stable cash flow support of wind power + solid waste. In Sichuan, Sichuan New Energy Power Company Limited(000155) is expected to continue to give full play to the advantages of state-owned enterprises, accelerate the integrated development of lithium resources in Western Sichuan and reduce China's dependence on foreign strategic lithium resources. The forward-looking strategic cooperation of major shareholders is expected to bring more in-depth cooperation to listed companies and accelerate the development of the company's lithium battery industry. Based on the accelerated upward trend of lithium salt price and the continuous gap between supply and demand, which supports the high operation of lithium salt price, we assume that the lithium salt price is 250000 yuan / ton before tax and the lithium concentrate price is 2500 US dollars / ton from 2022 to 2023, and adjust the performance forecast of the company in 2022 and 2023. We maintained the operating revenue of RMB 3.612 billion in 2021, with a year-on-year increase of 80.9%. From 2022 to 2023, the operating revenue was adjusted from RMB 6.185 billion and RMB 8.944 billion to RMB 5.713 billion and RMB 8.988 billion, with a year-on-year increase of 58.2% and 57.3% respectively; From 2021 to 2023, the net profit attributable to the parent company was adjusted from 593 million yuan, 1361 million yuan and 2298 million yuan to 602 million yuan, 1209 million yuan and 2209 million yuan respectively, with a year-on-year increase of 292.9%, 100.7% and 82.7% respectively. The EPS was 0.42, 0.83 and 1.52 yuan respectively, corresponding to the closing price of 26.48 yuan on December 15, 2021, and the PE was 63.70/31.73/17.37 times, maintaining the "buy" rating.
Risk statement
1. Lithium mine construction progress was not as expected and failed to be put into operation on time;
2. The price of lithium resources decreased significantly;
3. The acquisition and construction progress of lithium salt business was less than expected.
4. In the future, the integrated development of lithium resources in Sichuan by major shareholders is less than expected.
