\u3000\u3 China Vanke Co.Ltd(000002) 497 Sichuan Yahua Industrial Group Co.Ltd(002497) )
Starting from the popular explosion and becoming lithium, the dual main industry is driven and rejuvenated
Sichuan Yahua Industrial Group Co.Ltd(002497) started from civil explosion and gradually entered the lithium salt industry through M & A, forming a joint driven layout of civil explosion and lithium salt. The civil explosive business provides the company with stable cash flow. The excellent performance in 2021 is due to the simultaneous increase of volume and profit brought by the increase of lithium salt price and output. The capacity of the company's lithium business expands rapidly. The upstream mine has sufficient underwriting rights, resource guarantee and inventory. The downstream not only has close cooperation with cathode materials and battery manufacturers, but also directly signs large orders with vehicle manufacturer Tesla. It can be said that the upstream, middle and downstream of the industrial chain are guaranteed, Lithium business is a sharp weapon for the company's growth.
Lithium salt business: the resources at the mine end are guaranteed, and the lithium salt production capacity is expanded
Upstream resource side:
1) at present, the company has the exclusive right to sell lithium concentrate of no less than 120000 tons per year for mtattin, 75000 tons per year for mtfinniss and 120000 tons per year for kenticha. Mtcation is a mine in production, supplying 150000 tons of concentrate to the company in 2021; Mtfinniss is expected to be put into operation in Q4 this year and kenticha is expected to be put into operation in Q2 next year;
2) Lijiagou mine, which the company shares, is expected to be put into operation in the second half of this year and begin to release production capacity. It is expected that the concentrate production capacity will be 180000 tons / year. Lijiagou lithium mine will give priority to the production of Guoli under Yahua;
3) in the long term, the company shares Eastern iron industry and ev. Eastern iron industry owns trighill lithium project, and ev owns Xiaohe, weinbeni and Eastern Alps lithium projects.
Midstream smelting end:
1) the company currently has 43000 tons of lithium salt production capacity, including 33000 tons of lithium hydroxide production capacity. Among the 43000 tons of production capacity, Guoli, Xingsheng and Ya'an have 17000 tons, 6000 tons and 20000 tons of production capacity respectively;
2) lithium salt production capacity is expected to reach 73000 tons by the end of this year and more than 100000 tons in 2025. The subsequent capacity expansion is mainly in Ya'an phase II and phase III. at present, 30000 tons of lithium hydroxide in phase II with an investment of 1.5 billion yuan will be put into operation at the end of this year, and the 20000 tons of lithium hydroxide project in Ya'an phase III will be started at the same time after it is completed.
Downstream application end:
The company's customer orders are stable and high-quality. In addition to maintaining stable cooperation with beiteri, Guizhou Zhenhua E-Chem Inc(688707) , meimeike, Byd Company Limited(002594) , Xtc New Energy Materials(Xiamen) Co.Ltd(688778) and other cathode materials and battery factories, the company successfully entered Tesla's supply chain in 2020 and began to supply goods in July 2021. The company's co renting with Tesla will lay a good foundation for the company's orders in the next few years, and can sign orders directly with the vehicle factory, which will also significantly enhance the company's influence.
Civil explosive business: integration and expansion of beneficial industries + large volume of electronic detonators + steady growth of infrastructure
Civil explosive business is the foundation of the company, which provides abundant cash flow for the company and will contribute to stable revenue and profits in the future. Looking forward to the civil explosive business in the next few years, there are three main growth potentials: 1) the 14th five year plan requires the integration and reorganization of the civil explosive industry. Yahua has rich experience in M & A at home and abroad, and as the top four old civil explosive manufacturers in output value, it will fully benefit; 2) The Ministry of industry and information technology promotes the high-quality development of the civil explosive industry, and the electronic detonator will be fully iterated. Yahua is the largest electronic detonator manufacturer in China, which will fully benefit from the improvement of track penetration and industry scale; 3) The infrastructure construction represented by Sichuan Tibet railway has benefited from the steady growth of infrastructure construction, and the business growth of Yahua has been fully guaranteed.
Investment advice
We expect the company to realize the net profit attributable to the parent company of RMB 913 million, RMB 3.784 billion and RMB 4.706 billion respectively from 2021 to 2023. The PE corresponding to the current market value is 33x / 8x / 6x respectively, and the buy rating is given for the first time.
Risk tips
The risk of sharp price fluctuation of lithium salt, the increase of downstream demand is less than the expected risk, the progress of lithium salt project is less than the expected risk, and the supply of lithium ore is less than the expected risk.
