[key points of investment]
Lithium resources: the pattern is concentrated and the expansion of production is slow. In 2021, the top four lithium salt markets in the world accounted for 65%. In 2022, the output of lithium salt industry increased by about 30%. Most lithium projects are abroad, and the project delay probability is high. The production expansion time of lithium mine is about 3 years, the cathode material is about 1 year, and the battery is about 0.5 years.
Cathode material: the pattern is scattered and the production is expanding rapidly. In 2020, the top four cathode materials in the world accounted for 26%. There are many new entrants to lithium iron phosphate. There are more than 25 listed companies with lithium iron phosphate layout in China, which has reached the peak of production recently. According to the capacity calculation, in 2022, the planned capacity growth rate of mainstream ternary cathode is 75%, and the planned capacity growth rate of mainstream iron lithium cathode is as high as 135%.
Lithium battery: leading expansion, cutting-edge and radical. The production expansion of leading enterprises is clear, the customers are relatively high-quality, the cash on hand is also rich, and the capacity expansion can basically be effectively implemented according to the plan. In 2022, according to the statistics of the production capacity of the top four lithium battery enterprises alone, it reached 854gwh, and LG raised about 68.3 billion yuan, which is mainly used for production expansion. The goal of cutting-edge battery is radical. Although the position of cutting-edge enterprises is not stable, the short-term financing environment is good. At the moment when the market demand is expected to grow rapidly, the rapid expansion of production capacity is relatively certain. China Innovation Airlines is preparing to raise $1.5 billion in Hong Kong stock IPO to expand its production recently. According to our statistics, in 2022, the production capacity of the world's top ten power battery enterprises increased by 67%, showing the characteristics of rapid production expansion.
[configuration suggestions]
Sustainability will exceed expectations: demand will continue to exceed supply for two years. Many production expansion projects in 2023 are planned to be put into operation in the second half of the year or at the end of the year. Considering the ramp up of production capacity, it means that the supply increment is limited. According to our statistics, the capacity expansion of lithium ore is significantly slower than that of cathode and battery. The situation of lithium ore in short supply will continue in the next two years.
Growth will exceed expectations: a five-year compound growth rate of 33%. In 2020, 68% of the downstream demand for lithium resources will be lithium batteries, and the growth of lithium resources will basically keep pace with lithium batteries. ALB predicts that the compound growth rate of lithium resource demand will be 33% in 2025 compared with 2020. Considering the stock effect of cathode materials and lithium battery expansion, the demand will exceed expectations.
We judge that two types of stocks deserve attention. Low valuation: Tianqi Lithium Corporation(002466) , Ganfeng Lithium Co.Ltd(002460) , Sichuan Yahua Industrial Group Co.Ltd(002497) , Suzhou Ta&A Ultra Clean Technology Co.Ltd(300390) , etc; Fast production expansion: Youngy Co.Ltd(002192) , Sinomine Resource Group Co.Ltd(002738) , Yongxing Special Materials Technology Co.Ltd(002756) , Jiangxi Special Electric Motor Co.Ltd(002176) , etc.
[risk tips]
Geopolitical risk of resource products
Price risk of policy intervention
Risk of technical route change
Subsidy reduction risk
