\u3000\u3 China Vanke Co.Ltd(000002) 240 Chengxin Lithium Group Co.Ltd(002240) )
Events
Chengxin Lithium Group Co.Ltd(002240) released the annual report of 2021 and the performance forecast of the first quarter of 2022, in which the company achieved an operating revenue of about 2.934 billion yuan in 2021, a year-on-year increase of 63.88%; In 2021, the net profit attributable to the parent company was about 851 million yuan, with a year-on-year increase of 303029%. In the first quarter of 2022, the net profit attributable to the parent company was RMB 900-1.1 billion, with a year-on-year increase of 765.24% – 957.52%.
Key investment points
The performance increased significantly, mainly benefiting from the simultaneous rise of lithium salt volume and price
The company’s net profit attributable to the parent company in 2021 increased by 303029% year-on-year, mainly due to the rise in the volume and price of lithium products. The company will produce 40300 tons of lithium products in 2021, mainly including lithium carbonate, lithium hydroxide and metal lithium. Lithium products sold 42100 tons, with a year-on-year increase of 108.88%. Lithium products sold at 59900 yuan / ton in the first half of the year and 116900 yuan / ton in the second half of the year. The annual average price reached 66200 yuan / ton, a year-on-year increase of 92.20%. During the performance period, the production and sales of lithium products increased significantly, mainly because the annual production capacity of 25000 tons of lithium carbonate and 15000 tons of lithium hydroxide of Zhiyuan lithium, a subsidiary of Zhiyuan lithium, was put into operation in the fourth quarter of 2020 and entered the production capacity release period in 2021. In 2022, the price of lithium products of the company increased further. According to the quotation of Baichuan Yingfu, the average prices of battery grade lithium carbonate and lithium hydroxide in China from January to March 2022 were 420000 and 362000 yuan / ton respectively, which was 214000 and 170000 yuan / ton higher than that in the fourth quarter of last year, resulting in a significant increase in the profit of single ton sales of lithium products of the company. The net profit attributable to the parent company in the first quarter increased by 188.46% – 252.56% month on month compared with the fourth quarter.
The global layout of lithium salt production capacity has entered the production capacity release period
In terms of lithium products, the company has four lithium product production bases in the world. At present, the lithium salt production capacity has reached 70000 tons, and the total capacity is expected to reach 130000 tons in 2023. In the fourth quarter of 2020, Zhiyuan lithium industry built 10000 tons of lithium carbonate and 10000 tons of lithium hydroxide production lines, with a total capacity of 25000 tons of lithium carbonate and 15000 tons of lithium hydroxide. It entered the climbing period in 2021. Suiningsheng New Year’s production of 30000 tons of lithium hydroxide has been completed and put into operation in January 2022. In addition, Indonesia Shengxin is building a lithium salt production capacity with an annual output of 60000 tons in Indonesia’s central Sulawesi province, which is expected to be completed and put into operation in 2023. In terms of metal lithium, Shehong base plans to produce 1000 tons of metal lithium per year, with a planned capacity of 600 tons in phase I. at present, 400 tons have been built, and the remaining capacity is under construction.
The global acquisition of lithium resources projects will increase the self-sufficiency rate of lithium mines
By March 2022, the company’s worldwide equity reserves of lithium control resources had reached 793400 tons of LCE. The subsidiary aoyinuo mining owns the yelonggou mining right in Jinchuan County, Sichuan Province, with the proved reserves reaching 275400 tons of LCE. The project was put into operation in 2019, and the current annual production capacity reaches 405000 tons of raw ore. In 2021, it acquired 51% equity of maxmind Hong Kong, and its subsidiary owns the sabixing Lithium Tantalum mine project in Zimbabwe, with a resource volume of 231400 tons of LCE. The project is expected to build an annual mining capacity of 200000 tons, which is expected to be completed by the end of 2022. In 2021, the company participated in 25.19% equity of Huirong mining industry in Yajiang County, Sichuan Province, under which there was a prospecting right, and the proved lithium resource reserve reached 1.5879 million tons of LCE. In terms of Salt Lake, the company acquired 100% equity of Argentine SESA company. SESA has the operation right of UT consortium, which operates Argentina sdla project with an annual production capacity of 2500 tons of lithium carbonate.
The supply of lithium resources is tight, and upstream enterprises continue to benefit
Benefiting from the explosive growth of new energy lithium battery industry chain, by 2025, the annual compound growth rate of global total lithium demand will be 34.53%, while the annual compound growth rate of lithium resource supply will be only 28.65%. Lithium resources will fall into a long-term shortage of supply. (see carbon neutralization driving new demand and shaping new pattern – annual strategy for new chemical materials 20220116 for supply and demand forecast) it is expected that the prices of lithium carbonate and lithium hydroxide will continue to be high, and the company will continue to benefit from controlling the upstream lithium mineral resources and distributing the lithium salt processing capacity.
Profit forecast
It is predicted that the net profit attributable to the parent company from 2022 to 2024 will be 3.588 billion yuan, 4.435 billion yuan and 5.506 billion yuan respectively, and the EPS will be 4.15, 5.12 and 6.36 yuan respectively. The corresponding PE of the current stock price will be 12, 10 and 8 times respectively, and the “recommended” investment rating will be given.
Risk tips
The global lithium salt lake and lithium mine were put into operation more than expected, the demand for lithium batteries was less than expected, and the company’s lithium mining progress was less than expected.
