\u3000\u30 Shenzhen Quanxinhao Co.Ltd(000007) 92 Qinghai Salt Lake Industry Co.Ltd(000792) )
Key investment points
Event: the company released the performance forecast for the first quarter of 2022. It is expected that the net profit attributable to the shareholders of the listed company will reach 3.45-3.55 billion yuan in 2022q1, with a year-on-year increase of 335.0% - 347.6% and a month on month increase of 523.9% - 542.0%.
Relying on the advantages of resources, build China's double leaders of potassium fertilizer and lithium salt. The company sits in Chaerhan Salt Lake in Qinghai, with 540 million tons of potassium chloride and 12 million tons of lithium chloride, ranking first in China. The company has formed a capacity of 5 million tons of potassium chloride, accounting for about 60% of the national capacity, and a capacity of 30000 tons of lithium carbonate, ranking among the top three in China. In the first quarter of 2022, the average ex factory price of 60% potassium chloride was 3688 yuan / ton, up 15.6% month on month. At present, the quotation is 3900 yuan / ton, and the average market price of battery grade lithium carbonate is 432000 yuan / ton, up 102.2% month on month. In the first quarter, the company achieved sales of 1.45 million tons of potassium chloride and 6700 tons of lithium carbonate. The volume and price rose together, and the performance of the company in the next quarter increased month on month.
Under the oligopoly competition pattern, the price of potash fertilizer is easy to rise but difficult to fall. The unbalanced distribution of global potash resources has led to the oligopoly pattern of the potash industry. In recent years, the utilization rate of global potash production capacity has been basically stable, and the new production capacity in the future is limited. On the demand side, the rise of Shenzhen Agricultural Products Group Co.Ltd(000061) price boosted the demand for potash fertilizer, and the global demand for potash fertilizer increased by 6.1% in 2021. At the same time, affected by geopolitics and sanctions, the exports of potash fertilizer manufacturers in Russia and Belarus were blocked. Under the mismatch of supply and demand, the price of potash fertilizer rose rapidly. In 2022, the contract price of potash fertilizer in China was locked at $590 / ton, while the FOB price of potassium chloride in main overseas producing areas exceeded $700 / ton, a record high in recent ten years.
The lithium extraction leader in Salt Lake is expected to see a simultaneous increase in volume and price in 2022. In 2021, the installed capacity of China Shipbuilding Industry Group Power Co.Ltd(600482) battery increased by 125% year-on-year, and the price of potassium carbonate rose rapidly driven by the strong demand in the downstream. At present, the market price of battery grade products has reached 480000 yuan / ton. Some units of the 20000 ton battery grade lithium carbonate expansion project of Lanke lithium industry, the holding subsidiary of the company, have been put into operation in 2021, and a capacity of 30000 tons will be formed in 2022. With the release of new capacity, the performance contribution of the company's lithium salt sector will be significantly improved.
Profit forecast and investment suggestions. It is estimated that the EPS from 2021 to 2023 will be 0.78 yuan, 2.47 yuan and 2.58 yuan respectively. Under the mismatch of supply and demand, the future profit center of potassium fertilizer and lithium salt products will rise significantly compared with previous years. As the double leader of China's potassium fertilizer and lithium salt, the company has fully benefited from the product boom. Meanwhile, the expansion of lithium salt production capacity during the 14th Five Year Plan period ensures the future growth of the company. We give the company a valuation of 15 times in 2022, corresponding to the target price of 37.05 yuan, and give a "buy" rating for the first time.
Risk warning: the downstream demand for potassium fertilizer and lithium salt is lower than expected; The production progress of lithium carbonate project is less than expected.
