\u3000\u3 China Vanke Co.Ltd(000002) 460 Ganfeng Lithium Co.Ltd(002460) )
Event: on March 15, the company released the main business data forecast from January to February 2022: the company achieved an operating revenue of about 3.6 billion yuan, a year-on-year increase of about 260%; The net profit attributable to the shareholders of the listed company was about 1.4 billion yuan, an increase of about 300% year-on-year; After deducting non recurring profits and losses, the net profit attributable to shareholders of listed companies was about 1.8 billion yuan, an increase of about 1000% year-on-year.
Comments: (1) from January to February, the company’s net profit deducted from non parent company was 400 million yuan higher than the net profit attributable to parent company, which was partly due to the decline of Pilbara’s share price from a $3.52/share on January 4, 2022 to a $2.71/share on February 28, 2022, a decrease of 23%, which affected the income from the changes in the fair value of the company’s financial assets. (2) From January to February, the net interest rate deducted from non parent company is about 50%, which is significantly higher than 25% of the net interest rate deducted from non parent company in 2021.
Lithium salt production capacity continues to expand, and the guideline of 200000 t / a LCE production capacity in 2025 is clear. As of December 2021, the company’s capacity of battery grade lithium carbonate is 43000 T / A and that of battery grade lithium hydroxide is 81000 T / A. The future capacity planning includes: 1) the new energy material project of lithium battery with an annual output of 50000 tons in Fengcheng City, Jiangxi Province. The project is constructed in two phases, and the first phase is the lithium hydroxide project with an annual output of 25000 tons; 2) Cauchari olaroz lithium salt lake project is constructed in two phases. The capacity of phase I is 40000 tons of lithium carbonate, and the capacity of phase II expansion is not less than 20000 tons of lithium carbonate equivalent; 3) Mariana lithium salt lake project, with a phase I capacity of 20000 tons of lithium chloride; 4) Sonora lithium clay project has a capacity of 20000 tons of lithium hydroxide in phase I.
Upstream resources continue to increase, while the layout outside China is in progress. In January 2022, the company signed a strategic agreement with the people’s Government of Haixi Prefecture, Qinghai Province, to strengthen the comprehensive development and utilization of lithium resources in Haixi Salt Lake, and strengthen cooperation in exploration and development of lithium salt lake, metal lithium and its supporting capacity; In February 2022, the company signed a cooperation agreement with PMI, which agreed that PMI would provide the company with spodumene underwritten by mtmarion spodumene project, and the company would process it into lithium compound products agreed by both parties and be responsible for sales. At the same time, the production capacity of mtmarion spodumene project is expected to undergo technical transformation and expansion, and the expansion project is preliminarily expected to be put into operation in the second half of 2022, It is expected that the scale of original production capacity will increase by 10-15%.
The fundamentals of lithium industry are still supported by strong demand for electric vehicles. In the middle of February 2022, the output of Shanxi Guoxin Energy Corporation Limited(600617) vehicles was 370000, with a penetration rate of 20.3%, reaching a new record high; In the Q4 announcement of the 21st year, Yabao company raised the lithium demand in 2025 and 2030 to 1.5 million tons and 3.2 million tons of LCE respectively. According to our annual strategy report, the global demand for lithium is expected to reach 1606000 tons of LCE in 2025, with CAGR 34% from 2021 to 2025, which is higher than CAGR 30% on the supply side. The continuation of the contradiction between supply and demand will still support the high price of lithium salt.
Profit forecast and rating: considering the continuous high price of lithium salt and the guarantee of high-quality customer orders, we raised the profit forecast. It is estimated that EPS will be 3.60 yuan, 8.42 yuan and 12.37 yuan from 2021 to 2023, up 4.3% / 32% / 45% respectively, corresponding to 35 times, 15 times and 10 times of 20212023pe. In view of the advantages of the company’s integrated layout, we maintain the “overweight” rating.
Risk warning: the output of downstream electric vehicles is lower than expected; Price fluctuation risk of raw materials; Market competition intensifies risks; The supply side capacity of the industry is released too quickly; The project construction of the company is less than expected; Safety and environmental protection risks, etc.
