\u3000\u3 China Vanke Co.Ltd(000002) 240 Chengxin Lithium Group Co.Ltd(002240) )
Event: on March 28, 2022, the company released the annual report of 2021 and the performance forecast of the first quarter of 2022. In 2021, the company’s operating revenue was 2.934 billion yuan, a year-on-year increase of + 63.88%; The net profit attributable to the parent company was 851 million yuan, a year-on-year increase of + 303029%. It is estimated that the net profit attributable to the parent company will be RMB 900-11 billion in the first quarter of 2022, with a year-on-year increase of 765.24% – 957.52%.
Comments: the volume and price of the company’s products rose in 2021, and the net profit attributable to the parent company in Q1 is expected to reach a record high in 22 years. In 2021, the company sold 42000 tons of lithium products, an increase of 108.88% year-on-year. The average selling prices of the company’s products in the first and second half of the year were 60000 yuan / ton and 117000 yuan / ton, both higher than that in the same period of the previous year. The performance continued to improve in 2022. As of March 27, 2022, the price of battery grade lithium carbonate was 503000 yuan / ton, an increase of 81% over the beginning of the year, and the price of lithium hydroxide was 492000 yuan / ton, an increase of 121% over the beginning of the year.
The resource layout continues to increase, and overseas underwriting agreements help the supply of raw materials. At present, the company’s yilonggou lithium mine has been mass produced, which can contribute about 75000 tons of lithium concentrate every year. Other resource mines such as taiyanghekou, Murong lithium mine and sabixing Lithium Tantalum mine in Zimbabwe are in the exploration stage. At the same time, the company has lithium underwriting agreements with Galaxy resources and avz to help the supply of upstream lithium resources of the company.
It is proposed to introduce war investment Byd Company Limited(002594) , so as to obtain the space for coordinated industrial growth. On March 22, 2022, the company announced that it planned to issue shares to Byd Company Limited(002594) with the number of no less than 46.52 million shares and no more than 69.78 million shares (including this number), accounting for no less than 5.10% and no more than 7.46% of the total share capital of Chengxin Lithium Group Co.Ltd(002240) after the issuance, and the total amount of funds to be raised (including issuance expenses) shall not exceed 3 billion yuan. The two sides will carry out all-round cooperation in the purchase and sale of raw materials, raw material processing, technology, mineral resources and industrial chain resources.
Add 60000 T / a lithium salt project invested by Indonesia, and the lithium salt production capacity is expected to reach 130000 T / A in 2023. On September 23, 2021, the company announced that Shengxin international, a wholly-owned subsidiary of Chengxin Lithium Group Co.Ltd(002240) company, plans to set up a joint venture with stellar in Indonesia to invest and build a project with an annual output of 50000 tons of lithium hydroxide and 10000 tons of lithium carbonate in the Industrial Park (IMIP). The total investment of the project is about US $350 million, and Shengxin international holds 65% of the equity of the joint venture. Combined with the company’s lithium salt production capacity in China: 40000 tons / year for Zhiyuan lithium industry and 30000 tons / year for Shengxin lithium industry, the company is expected to form a lithium salt production capacity of 130000 tons / year in 2023.
Profit forecast and Valuation: the current lithium salt price is 328% higher than the average price in 2021. The supply and demand pattern of the industry is still tight. It is expected that the lithium price will remain high and volatile in the next 2-3 years. Considering that the company’s capacity will expand by 86% in the future compared with that in 2021, and the company will bind first-class battery enterprise customers for a long time, we raise the profit forecast for 22-23 years. It is expected that the EPS in 20222023 will be 4.34 yuan and 5.30 yuan respectively, with an increase of 281% / 284% respectively. The new profit forecast for 2024 is expected to be 7.25 yuan in 2024, corresponding to 12 times, 10 times and 7 times of PE in 20222024. It is recommended to pay attention.
Risk warning: the output of downstream electric vehicles is lower than expected; Price fluctuation risk of raw materials; Market competition intensifies risks; The supply side capacity of the industry is released too quickly; The project construction of the company is less than expected; Safety and environmental protection risks, etc.
