\u3000\u30 Shenzhen Quanxinhao Co.Ltd(000007) 62 Tibet Mineral Development Co.Ltd(000762) )
Event overview: on March 26, the company announced the 2021 annual performance express and the performance forecast for the first quarter of 2022: (1) it is expected to achieve an operating revenue of 644 million yuan in 2021, a year-on-year increase of 68.2%, a total profit of 199 million yuan, a year-on-year increase of 456.25%, and a net profit attributable to the parent company of 140 million yuan, a year-on-year increase of 388.9%. (2) It is estimated that in 2022q1, the operating revenue will be RMB Wuxi Lead Intelligent Equipment Co.Ltd(300450) million, with a year-on-year increase of 120.39% - 230.58%, the total profit will be RMB 220330 million, with a year-on-year increase of 788.17% - 123226%, and the net profit attributable to the parent company will be RMB 100150 million, with a year-on-year increase of 398.08% - 647.12%.
Analysis and judgment:
The volume and price of main business increased simultaneously, and the output of lithium concentrate and chromite exceeded the company's guidelines, contributing to the release of performance in 2021 and 22q1. (1) Volume: the output of the company's two major products exceeds the company's guidelines. The company expects the annual output of lithium concentrate to be 9016 tons in 2021 (the company's guideline is 7000 tons), with a significant year-on-year increase of 96%. Zabuye's phase I technical transformation has achieved results; The annual output of chromite is expected to be 141000 tons (130000 tons according to the company's guidelines), with a significant year-on-year increase of 111.65%. (2) Price: according to Asia metal network, the price of battery grade lithium carbonate increased from 53000 yuan / ton at the beginning of the year to 278000 yuan / ton in 2021, with an increase of 424%. At the same time, it has continued to rise sharply to 498000 yuan / ton since 2022; In 2021, the price of chromite (40% lump ore in Chinese ports) increased from 38.5 yuan / ton dry ton at the beginning of the year to 56.5 yuan / dry ton, an increase of 47%. At the same time, it has continued to rise to 64 yuan / dry ton since 2022. (3) Outlook: it is expected that the performance of the company in 2022 will be driven by lithium concentrate. The lithium concentrate of the company will be harvested at the end of each year and sold in the second year. The sharp increase in the output of lithium concentrate in 2021 will become the main driving force of the performance in 2022.
Excellent resource endowment brings significant cost advantages, and the acceleration of development will greatly benefit from the current round of lithium price rise. (1) At present, the company's preparation for Zabuye phase II project is progressing smoothly. It cooperates with East China Engineering Science And Technology Co.Ltd(002140) in the form of EPC + O. The production capacity of 12000 tons of lithium carbonate may be completed and put into operation in 2023, and the development of Zabuye Salt Lake has been greatly accelerated. (2) According to the feasibility study, the full cost of phase II project after deducting depreciation and various expenses is 42500 yuan / ton, and the full cost after deducting the income of by-products is 24100 yuan / ton. The cost of lithium extraction is lower than that of Qinghai Salt Lake, and it is on the left side of the global salt lake lithium extraction cost curve. (3) Benefiting from the mismatch between the substantial growth of downstream demand for new energy and the capital expenditure rate of upstream lithium resources, we believe that the duration of this round of lithium price cycle and the height of lithium price center are expected to continue to exceed expectations. Zabuye Salt Lake, as one of the lowest cost Salt Lake Lithium extraction projects in the world, is expected to benefit significantly.
Under the energy revolution, the "ballast stone" for the protection and supply of China's lithium resources, China's local high-quality lithium resources will be strategically reassessed. The strategic goal of the company is to produce 5000 tons of lithium carbonate in 2022, no less than 10000 tons in 2023, 17000 tons in 2024 and no less than 30000 tons in 20252026. The plan will be further revised according to the requirements of Baowu and the government of the autonomous region of China. We believe that under the background of China's low self-sufficiency rate of lithium resources, the company is expected to significantly benefit from the strategic opportunity of China's local lithium resource development.
Investment suggestion: Investment logic: high quality chromite resources contribute to stable gross profit, and Zabuye phase II salt lake lithium extraction project opens up future growth space. We raised the company's net profit attributable to the parent company from 2021 to 2023 to 140 million yuan, 785 million yuan and 1.032 billion yuan, corresponding to the closing price on March 28, 2022. The PE from 2021 to 2023 was 154, 27 and 21 times in turn, maintaining the company's "recommended" rating.
Risk warning: the terminal demand is less than expected; Lithium prices fell sharply; The project is not progressing as expected.
