\u3000\u3 China Vanke Co.Ltd(000002) 240 Chengxin Lithium Group Co.Ltd(002240) )
Event: on March 28, the company released the 2021 annual report and 22q1 performance forecast. 1) In 2021, the revenue was 2.934 billion yuan, a year-on-year increase of 63.88%; The net profit attributable to the parent company was 850 million yuan, a year-on-year increase of 303029%; Net profit deducted from non parent company was 861 million yuan, with a year-on-year increase of 479.05%. 2) In 2021q4, the company achieved a revenue of 1.075 billion yuan, a year-on-year increase of 244.93% and a month on month increase of 48.03%; The net profit attributable to the parent company was 312 million yuan, a year-on-year increase of 1437% and a month on month increase of 26%; Net profit deducted from non parent company was 350 million yuan, with a year-on-year increase of 124463% and a month on month increase of 42%. 3) The company expects the net profit attributable to the parent company in 22q1 to be RMB 900-1.1 billion, with a year-on-year increase of 765.24% – 957.52%, deducting the net profit not attributable to the parent company of RMB 895-1.095 billion, with a year-on-year increase of 806.35% – 100889%.
Both production and sales are booming, and the volume and price rise together to promote performance growth. 1) Volume: the production and sales volume of lithium products increased year-on-year. In 2021, the output of lithium salt products 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 inventory level continued to decline, from 3247 tons to 1441 tons, a year-on-year decrease of 55.61%, and the industry demand was strong. 2) Price: lithium prices accelerated. In 2021, the price of lithium salt rose in an all-round way. The average sales price of lithium salt in the first half of the year was 59900 yuan and the average sales price of lithium salt in the second half of the year was 116900 yuan. 3) The widening of the price difference between 22q1 concentrate and lithium salt helps to release the performance: the company’s 22q1 performance is beautiful, and the single quarter performance exceeds the annual performance in 2021. The main reason is that the price of 22q1 lithium salt accelerates to rise, which exceeds the increase of cost (lithium concentrate price), the company’s profit is better, and the performance is released faster.
The resource layout is the next city, and the diversified resource guarantee layout is initially completed. The company signed a strategic cooperation framework agreement with Guocheng group. The two sides will actively promote the resumption of production of Jinxin mining. The company will prepay funds to Jinxin mining to solve the debt problem and resume mine operation. The company has the right to obtain no less than 50% of lithium concentrate products of Jinxin mining. In addition, the layout of other resources of the company also includes: (1) aoyinuo Mining: the raw ore production scale of yelonggou spodumene mine is 405000 tons / year, and the taiyanghekou lithium Polymetallic Mine is currently in the stage of exploration right; (2) Maxmind Hong Kong 51% equity: owns the mining certificate of sabixing Lithium Tantalum mine project in Zimbabwe. The designed raw ore production scale is 900000 tons / year, equivalent to about 200000 tons of lithium concentrate. It is expected to be completed and put into operation by the end of 2022; (3) 25.19% equity of Huirong Mining: by the end of December 2020, 642900 tons of Li2O resources have been proved, with an average grade of 1.63%; (4) 100% equity of Argentina SESA company: SESA owns the operation right of UT consortium, which operates Argentina sdla project with an annual production capacity of 2500 tons of LCE.
Radical smelting capacity planning, ranking among the first-line lithium salt manufacturers. At present, the company has built a lithium salt production capacity of 70000 tons, including 45000 tons of lithium hydroxide and 25000 tons of lithium carbonate. Meanwhile, Indonesia plans to build 60000 tons of lithium salt, which is expected to be completed and put into operation in 2023. It is expected to reach 130000 tons of lithium salt production capacity in the future, becoming one of the largest lithium salt smelters in China.
Investment suggestion: the company’s lithium salt production capacity will be significantly expanded in the future. At the same time, diversified lithium resource guarantee measures will be taken in parallel, and Byd Company Limited(002594) as a strategic investor will be introduced to deeply bind with the downstream. In the case of high lithium price and capacity release, the performance is expected to accelerate the release. We raised the company’s net profit attributable to the parent company from 2022 to 2024 to 3.68 billion yuan, 4.41 billion yuan and 5.49 billion yuan. The PE corresponding to the closing price on March 29 was 13, 11 and 9 times respectively, maintaining the “recommended” rating.
Risk tip: the demand is less than expected, the lithium price has fallen sharply and its own project is less than expected.
