\u3000\u30 Shenzhen Quanxinhao Co.Ltd(000007) 92 Qinghai Salt Lake Industry Co.Ltd(000792) )
Event overview: on April 7, the Ministry of industry and information technology and other six departments jointly issued the guiding opinions on promoting the high-quality development of petrochemical and chemical industry in the 14th five year plan, requiring to strengthen the guarantee of chemical fertilizer production factors, improve production concentration and capacity utilization of backbone enterprises, and ensure the stable supply of chemical fertilizer. At the same time, in accordance with the principle of marketization, promote international cooperation in the development of potash and other resources, and strengthen the exploration of China’s potassium resources.
Analysis and judgment: the global potash supply and demand is tight and the price is high, Qinghai Salt Lake Industry Co.Ltd(000792) is the “ballast” for national food security and ensuring potash supply. (1) China is one of the largest potash fertilizer demanders in the world, but its external dependence is about 50%. Under the conflict between Russia and Ukraine, Russia and Belarus, the world’s major potash fertilizer producers, have been sanctioned, resulting in the suspension of the circulation of potash fertilizer goods. Under the high uncertainty of overseas supply, the supply of potash fertilizer in China and even the world is tight, and the global price of potash fertilizer has reached a historical high in recent 10 years. According to the agricultural materials guide, the price of large granular potassium chloride in Brazil reached US $1200 / ton, and the demand is still strong. (2) The company has an annual production capacity of 5 million tons of potash fertilizer, ranking first in China and fourth in the world. The company has improved the self-sufficiency rate of potash fertilizer in China and played the role of “ballast” of potash fertilizer supply to a large extent. In 2022, the contract price of potash fertilizer reached by the Chinese negotiation team and Canadian potash fertilizer company was $590 / ton CFR, and China continues to maintain the status of “price depression” of potash fertilizer in the world.? The strategic position of food security is prominent, the global potash supply and demand pattern is improving, and the price may be high for a long time, which will significantly benefit the company. In the long run, there are few newly discovered potassium mines, the project production progress is low, and the growth rate of potassium fertilizer supply slows down. However, the contradiction between the continuous growth of population and the decline of per capita cultivated land area will support the long-term demand growth of potassium fertilizer; In the short term, the importance of food in Belarus under sanctions, the epidemic and the conflict between Russia and Ukraine is prominent, and the price of potassium fertilizer is expected to remain high.
It is difficult to slow down the contradiction between supply and demand of lithium resources. Accelerating China’s resource development is the best policy, Qinghai Salt Lake Industry Co.Ltd(000792) is the guarantee for China’s lithium resources to be independent and controllable. (1) With the rapid growth of demand for downstream electric vehicles and energy storage, only increasing supply is the final solution to alleviate the contradiction between lithium supply and demand. Qinghai, Tibet, Sichuan, Jiangxi and other places in China are rich in lithium resources. Only by accelerating the development of China’s lithium resources and ensuring China’s own lithium resource supply can we ensure the safe development of China’s Shanxi Guoxin Energy Corporation Limited(600617) industrial chain. Otherwise, the profits of the industrial chain will be quickly transferred to the upstream and abroad, highlighting the strategic importance of China’s local lithium resources. (2) The company has formed a “1 + 2 + 3” salt lake lithium extraction project, in which Lanke lithium industry has reached the production capacity in phase I and is climbing the production capacity in phase II. The company discharges 20 Fawer Automotive Parts Limited Company(000030) 0000 tons of LiCl of old brine every year, which may support the large-scale expansion of lithium production capacity in the future. The company will undertake the important task of ensuring China’s lithium resources.
The price of potassium and lithium is high, and the company’s performance in 2022 may be accelerated under the accumulation of reserves in 2021. As of April 8, 2022, the tax inclusive price of potassium chloride (60% powder) in Qinghai Salt Lake has risen to 3900 yuan / ton, and the average tax inclusive price of industrial grade lithium carbonate is 483500 yuan / ton. According to the company’s announcement, in 2021, the company accumulated 370000 tons of potassium chloride and 3500 tons of lithium carbonate. We believe that the company, as a state-owned enterprise, will undertake the important task of ensuring the supply of potash fertilizer and lithium resources in China. Under the current high price of potash fertilizer and lithium, the company’s performance release in 2022 is worth looking forward to.
Investment suggestion: we believe that under the high price of potassium and lithium, the performance flexibility of the company is prominent. We raised the prediction of the net profit attributable to the parent company from 2021 to 2023 to 4.268 billion yuan, 10.065 billion yuan and 11.579 billion yuan. Based on the closing price on April 8, 2022, the corresponding PE is 41x, 17x and 15x respectively, maintaining the “recommendation” rating of the company.
Risk tip: the prices of potassium fertilizer and lithium salt fell sharply; The production progress of Lanke lithium is lower than expected
