Qinghai Salt Lake Industry Co.Ltd(000792) (000792)
Company recommendation logic:
The company is the absolute king in the field of potash fertilizer in China. At present, the global monopoly pattern of potash fertilizer continues. With the problem of food security, the price of potash fertilizer is expected to remain high;
In the lithium salt sector, the company acts as the largest Chaerhan Salt Lake in China, with first-class resource reserves. It can support the preparation of 100000 tons of lithium carbonate without expanding the production of old brine. Under the current high price boom of lithium carbonate, it is expected to enjoy the simultaneous increase of volume and price;
Technical support: the company focuses on research and development. In terms of potassium fertilizer, the company is the only enterprise in the world that has mastered all potassium chloride processing technologies; In terms of lithium carbonate, the company has also broken through the technology of extracting lithium salt from brine with ultra-high magnesium lithium ratio, forming a mature “adsorption + membrane separation” technology;
The company divested loss making assets and focused on potassium lithium business: Qinghai Salt Lake Industry Co.Ltd(000792) is the largest potash fertilizer manufacturer in China, with an existing potassium chloride production capacity of 5 million tons / year, ranking the fourth in the world. Lanke lithium, a holding subsidiary, has an annual capacity of 30000 tons of lithium carbonate, and the capacity expansion potential of lithium salt of subsequent companies is huge. The company encountered Waterloo in the comprehensive development of salt lake resources, and its operation fell into a mire. Limited by the insufficient supply of production factors (coal / natural gas) and soaring prices, and due to the unresolved problems of equipment and technology for a long time, the company stripped Salt Lake magnesium industry and Haina chemical industry from the Qinghai Salt Lake Industry Co.Ltd(000792) system based on the principle of “separation of good and bad”. Since 2020, the company has carried out judicial restructuring and completed the stripping of loss making assets. After debt to equity swap, the company has refocused on the advantageous business of potassium lithium. In 2020, the net profit attributable to the parent company was 2.04 billion yuan, which met the conditions for applying for resumption of listing and resumed listing in August 2021.
Potash fertilizer sector: the company is China’s potash fertilizer industry “Ballast stone, the company’s designed capacity of potassium chloride reaches 5 million tons, with an annual capacity of 5.5 million tons, accounting for 64% of the national capacity. With first-class technical support capacity, the company is the only enterprise in the world to master all potassium chloride processing technologies. With technical support, the company has the lowest cost of potassium fertilizer in the same industry and the highest gross profit margin in the same industry. It has been maintained at the level of 70% for many years, and will be at the price of potassium chloride Grid business cycle benefits.
Lithium salt sector: the company is the leader in lithium extraction from salt lakes in China. The company has a capacity of 30000 tons of battery grade lithium carbonate. The salt lake Byd Company Limited(002594) 30000 tons of battery grade lithium carbonate project is still under preparation, and plans a long-term capacity of 40000 tons of lithium salt. The company has sufficient supply of old brine resources, which can ensure the capacity expansion of 100000 tons of lithium carbonate. With the continuous optimization of the company’s salt lake lithium extraction technology, there is still room for decline in production costs. Benefiting from the increase in the price reduction of the company, the current lithium salt production and sales have increased rapidly, driving a high increase in performance.
Performance forecast: we adopt the segment valuation method for Qinghai Salt Lake Industry Co.Ltd(000792) . We predict that the net profit attributable to the parent company in 2022 will be about 9.148 billion yuan, including 6.86 billion yuan for potassium fertilizer, accounting for about 75%, and 2.29 billion yuan for lithium salt, accounting for about 25%. Comparable companies in potash fertilizer and lithium salt industries are selected for Valuation:
Potash fertilizer business: the comparable listed companies we selected are Zangger mining, Asia-Potash International Investment (Guangzhou) Co.Ltd(000893) and tongfa’ang tower. According to the wind consistency prediction, the PE of the comparable company will be 19.03 in 2022. We give the company 15-20 times PE multiples, corresponding to a market value of 102.9 billion yuan – 137.2 billion yuan.
Lithium salt business: the comparable listed companies we selected are Tibet Mineral Development Co.Ltd(000762) , Tibet Summit Resources Co.Ltd(600338) , Ganfeng Lithium Co.Ltd(002460) , Tianqi Lithium Corporation(002466) and Yongxing shares. According to the consistent prediction of wind, the PE of comparable companies will be 43.80 in 2022. We give the company 30-40 times PE multiples, corresponding to a market value of 68.7 billion yuan – 91.6 billion yuan.
To sum up, we believe that the reasonable market value of the company ranges from 171.6 billion yuan to 228.8 billion yuan, the corresponding weighted PE valuation level is about 19-25 times, and the corresponding reasonable stock price range is 31.58-42.11 yuan. The buy rating is given for the first time.
Risk warning: the progress of lithium carbonate production expansion is less than expected; The management and operation efficiency of the company is lower than expected; The development of new energy vehicles and energy storage is less than expected
