\u3000\u3 China Vanke Co.Ltd(000002) 240 Chengxin Lithium Group Co.Ltd(002240) )
Event: the company released its 2021 annual report. During the reporting period, the operating revenue reached 2.934 billion yuan, a year-on-year increase of 63.88%, the net profit attributable to the parent reached 851 million yuan, a year-on-year increase of 303029%, and the net profit deducted from non attributable to the parent reached 862 million yuan, a year-on-year increase of 479.05%. At the same time, the company released the performance forecast for the first quarter. It is expected that the net profit attributable to the parent company in the first quarter will be RMB 900-1.1 billion, with a year-on-year increase of 765.24% – 957.52%, and the net profit deducting non attributable to the parent company will be RMB 895-1.095 billion, with a year-on-year increase of 806.35% – 100889%.
Comments:
The price of lithium products increased rapidly in 2021. In 2021, the downstream demand of new energy continued to be strong, and the increase in the volume and price of lithium products boosted the company’s performance. In 2021, the company achieved an operating revenue of 2.934 billion yuan, a year-on-year increase of 63.88%, a net profit attributable to the parent company of 851 million yuan, a year-on-year increase of 303029%, and a net profit deducted from non attributable to the parent company of 862 million yuan, a year-on-year increase of 479.05%. During the reporting period, the production and operation of the lithium carbonate and lithium hydroxide production lines of Zhiyuan lithium industry, a subsidiary of the company, was in good condition, and the product quality was stable. At the same time, the rapid increase in the price of lithium salt products led to a sharp increase in the company’s performance. In 2021, the company’s lithium product revenue reached 278500 yuan, a year-on-year increase of 301.46%; The output of lithium salt products of the company reached 40200 tons, with a year-on-year increase of 90.50%; Lithium salt sales volume was 42100 tons, with a year-on-year increase of 108.88%. The company’s production capacity is continuously released, and the price of lithium products continues to rise. The performance growth in 2021 is deterministic and in line with expectations. In addition, the company expects the net profit attributable to the parent company in the first quarter of 2022 to be RMB 900-1.1 billion, with a year-on-year increase of 765.24% – 957.52%, and the net profit deducting non attributable to the parent company to be RMB 895 million-1.095 billion, with a year-on-year increase of 806.35% – 100889%. Due to the strong growth of downstream customers’ demand for lithium salt, the price of lithium salt products continues to rise, and the profit of the company’s lithium salt business has increased significantly compared with the same period of the previous year. The single quarter performance of 2022q1 has exceeded the performance of 2021, and the performance of Q1 meets the expectation.
Focus on the development of lithium new energy business. According to the company’s 2021 annual report, the company focuses on lithium mining and beneficiation, basic lithium salt and metal lithium. The rare earth business has been stripped in May 2021. At present, there is a small amount of forest business. In 2021, the business income of lithium products was 2.785 billion yuan, accounting for 94.92% of the total revenue, the gross profit margin reached 47.78%, and the contribution of gross profit was 1.331 billion yuan, accounting for 97.92% of the total gross profit. With the rapid development of global new energy vehicles and energy storage industry, lithium products are in strong market demand, which provides the company with huge market space and development opportunities. The company will expand production capacity planning in due time according to the market demand of lithium products in the future, and continuously improve the market share of lithium salt products.
The production capacity has been greatly improved, and the future volume is worth looking forward to. According to the 2021 annual report of the company, the effective capacity of lithium salt of the company in 2021 was 40000 tons (25000 tons of lithium carbonate + 15000 tons of lithium hydroxide of Zhiyuan lithium industry were completed in 2020), and the project of 30000 tons of lithium salt (all lithium hydroxide) produced by suiningsheng NEW year was completed and put into operation in January 2022. Indonesia Shengtuo has a design capacity of 60000 tons of lithium salt, which is currently under construction and is expected to be completed and put into operation in 2023. In addition, the first phase of the 600t metal lithium project of Shengwei lithium 1000 ton metal lithium project in Shehong, Sichuan Province has built a capacity of 400t, and the remaining capacity is under active construction. With the continuous promotion of lithium product projects, the company’s production capacity will increase rapidly, and the future volume is worth looking forward to.
Introduce Byd Company Limited(002594) as a strategic investor to strengthen upstream and downstream integrated cooperation. On March 22, 2022, the company signed a strategic cooperation agreement with Byd Company Limited(002594) and proposed to increase no more than 3 billion yuan to supplement working capital and repay debts. At the same time, the two sides will cooperate in the purchase and sale of raw materials, processing, mineral resources development and other fields. The company is expected to give priority to Byd Company Limited(002594) processing orders. Due to the increasing importance of lithium resources, the company is making an integrated layout around the upstream and downstream of the industrial chain, mining high-quality lithium resources in the upstream, accelerating cooperation with terminal manufacturers to ensure their own resource supply, solve inventory pressure and slow down lithium price fluctuations. With the deepening of upstream and downstream integrated cooperation in the industrial chain, the growth and sustainability of the lithium battery industry in the future are worth looking forward to.
Investment advice. It is estimated that the company’s EPS from 2022 to 2023 will be 3.52 yuan and 4.91 yuan respectively, and the corresponding PE will be 15.44 times and 11.08 times respectively. With the rapid development of global new energy vehicles and energy storage industry, lithium products are in strong market demand, which provides the company with huge market space and development opportunities. The company will expand production capacity planning in due time according to the market demand of lithium products in the future, and continuously improve the market share of lithium salt products. In addition, the company accelerates the integrated layout of upstream and downstream of the industrial chain, excavates high-quality lithium resources in the upstream, and speeds up cooperation with terminal manufacturers. In the future, the stability and sustainability of the company’s development will be good. Maintain the “prudent recommendation” rating of the company.
Risk warning. The company’s lithium project is not advancing as expected; The price of lithium products fell sharply; Downstream demand for new energy vehicles is lower than expected.
