\u3000\u3 China Vanke Co.Ltd(000002) 738 Sinomine Resource Group Co.Ltd(002738) )
Events
Sinomine Resource Group Co.Ltd(002738) announced that from January to February 2022, the company achieved an operating revenue of about 1.127 billion yuan, a year-on-year increase of about 417.70%; The net profit attributable to the parent company was about 486 million yuan, with a year-on-year increase of about 117012%.
Key investment points
Benefiting from the continuous rise of lithium price and large capacity of lithium salt, the operating data from January to February were bright
The net profit of the company from January to February 2022 reached 486 million yuan, which has exceeded the profit range of 198 million yuan to 258 million yuan in the fourth quarter of 2021 performance forecast. The company’s profit increased significantly, mainly due to the increase in the production and sales of lithium salt products and the continuous rise in product prices. In terms of production capacity, the company’s new 25000 ton battery grade lithium hydroxide and battery grade lithium carbonate production line reached production capacity in November 2021, and the technical transformation and expansion of 3000 ton lithium fluoride production line was completed in December. In 2022, the company’s lithium hydroxide, lithium carbonate and lithium fluoride will continue to increase in volume, contributing to certain sales growth. In terms of product price, according to the quotation of Baichuan Yingfu, the average prices of battery grade lithium carbonate and lithium hydroxide in China from January to February 2022 were 371900 yuan and 302600 yuan / ton respectively, 165500 yuan and 111200 yuan higher than that in the fourth quarter of last year, resulting in a significant increase in the company’s lithium salt sales profit. The growth of production and sales volume and the continuous rise of product prices contributed to the growth of performance
Lithium resources are controlled continuously, with high supply security
The company continued to control the upstream lithium resources. In 2022, the company further acquired and obtained 99.05% equity of bikita lithium mine in Zimbabwe. Superimposed on the Canadian Tanco mine controlled by the company, we calculate that the company’s equity reserves of lithium resources worldwide reach 1118500 tons of LCE.
1) the mining and beneficiation capacity of 120000 tons of spodumene ore in Tanco mine in Canada has been restored in October 2021. In addition, the company is studying the feasibility plan of building a beneficiation plant with a processing capacity of 500000 tons / year in Tanco mining area. The capacity expansion of Tanco mining area is worth looking forward to. 2) Bikita lithium mine acquired this year has a production capacity of 700000 tons of lithium diorite. In addition, the company is studying the feasibility plan of building a new processing capacity of 1.05 million tons / year in bikita mining area. With the acquisition of lithium resources and production capacity investment, the self supply guarantee ability of lithium resources has been further improved.
Lithium salt production capacity increased steadily, helping the development of the company
In terms of lithium salt, the company’s production line with an annual output of 25000 tons of battery grade lithium hydroxide and battery grade lithium carbonate was put into operation in August 2021 and realized product sales in October. At present, the production line has reached production capacity. In addition, in February 2022, the company announced that its subsidiary Chunpeng lithium invested in the construction of 35000 tons of lithium salt project, and the construction period of the project is one year.
As the production raw material of lithium hexafluorophosphate, lithium fluoride is the lithium processing business engaged in by the company in the early stage, occupies a high market share, and has successfully entered the Tesla supply chain. By the end of 2021, the production capacity of lithium fluoride was expanded from 3000 tons to 6000 tons. Lithium salt production capacity increased steadily, which helped the development of the company.
The supply of lithium resources is tight, and upstream enterprises continue to benefit
Benefiting from the explosive growth of new energy lithium battery industry chain, by 2025, the annual compound growth rate of global total lithium demand will be 34.53%, while the annual compound growth rate of lithium resource supply will be only 28.65%. Lithium resources will fall into a long-term shortage of supply. (see carbon neutralization driving new demand and shaping new pattern – annual strategy for new chemical materials 20220116 for supply and demand forecast) it is expected that the prices of lithium carbonate and lithium hydroxide will continue to be high, and the company will continue to benefit from controlling the upstream lithium mineral resources and distributing the lithium salt processing capacity.
Profit forecast
It is predicted that the net profit attributable to the parent company from 2021 to 2023 will be 520, 3705 and 5095 million yuan respectively, and the EPS will be 160, 11.39 and 15.67 yuan respectively. The corresponding PE of the current stock price is 62, 9 and 6 times respectively, and the “recommended” investment rating will be given.
Risk tips
The production of overseas lithium salt lakes and lithium mines exceeded expectations, the demand for lithium batteries was less than expected, and the company’s overseas lithium mining progress was less than expected.
