\u3000\u3 China Vanke Co.Ltd(000002) 497 Sichuan Yahua Industrial Group Co.Ltd(002497) )
According to the announcement that the subscription price of the wholly-owned units of the company and the subsidiaries of yazhun lithium was more than $21.235 million as of February 13, 2024, the subscription price of the wholly-owned units of the company was approved by the announcement that the subscription price of the wholly-owned units of the company and the subsidiaries of yazhun lithium accounted for $2.35 million per share. At the same time, Yahua international invested in cash to acquire 60% of the equity of the wholly-owned subsidiary of super lithium company, and controlled its Fugen lake hard rock spodumene lithium mine project and Georgia lake hard rock spodumene lithium mine project. On the same day, the two sides signed the sales and joint venture agreement.
Super lithium company profile: focus on the exploration and development of lithium, gold and copper resources. Super lithium owns brine lithium mines in Argentina, hard rock spodumene lithium mines in Lake Georgia and lake Fugen in Northern Ontario, Canada, and copper and gold mining and exploration rights in many regions of Argentina. According to the announcement of the company and the official website of ultra lithium company:
Directors and executives have Chinese backgrounds
(1) Mr. Lang Weiguo, chief executive officer and director: graduated from Heilongjiang Agricultural University with a bachelor’s degree and obtained a master’s degree in Canada. He has served as an executive of many listed mining companies, such as agro international holding company in Canada, Savoy resources mining company in the United States and dominion minerals mining company in the United States. Presided over overseas acquisition projects such as Douglas Lake mining company of the United States and conak resources company of Canada.
(2) Mr. Cao Shaoguo, director: Chairman of Litian group, one of the top 100 automobile circulation enterprises in China, President of Shanghai Council of Wudaokou School of finance, Tsinghua University, and deputy to the 12th National People’s Congress of Zhejiang Province.
Major lithium resource projects
(1) Laguna Salt Lake project: located in Atacama region of Argentina, it consists of three mining licenses, with a mining right area of 117 square kilometers and a lithium ion grade of up to 1270mg / L.
(2) Fugen lake hard rock spodumene lithium mine project: located in Ontario, Canada, with good geographical location and infrastructure, the project is composed of 16 mining rights, covering an area of 2.56 square kilometers. According to the surface outcrop area, the estimated resource is 6.4 million tons, and the average grade of lithium oxide is 2.2%. It is preliminarily estimated that the equivalent of lithium oxide is about 140000 tons, equivalent to 346000 tons of LCE.
(3) Georgia lake hard rock spodumene lithium mine project: located in Ontario, Canada, with good geographical location and infrastructure, the project consists of 16 mining rights, covering an area of 24.16 square kilometers. According to the surface outcrop area, the estimated resource volume is 5.4 million tons, and the average grade of lithium oxide is 1.2%. It is preliminarily estimated that the equivalent of lithium oxide is about 65000 tons, equivalent to 161000 tons of LCE.
Peer Investment: Zangger mining plans to participate in ultra lithium company and carry out investment cooperation on Laguna Salt Lake project in Argentina.
Other recent investment intentions of the company: according to the official website of Oceana lithium, it plans to be listed on the Australian Stock Exchange and has submitted a prospectus. Sichuan Yahua Industrial Group Co.Ltd(002497) plans to strategically participate in the company. The public offering is scheduled to be completed on April 22, and then it is planned to be listed on May 27. Kneer, the executive director and Talbot, the senior technical consultant in Oceana’s management, have worked in Galaxy lithium industry. Oceana’s main assets are two lithium projects, solonopole in Brazil and naperby in Australia.
The acquisition of the controlling interest in the lithium mining projects of Fugen lake and Georgia lake is the first time that the company controls the lithium mining project or leads the project process. (1) In terms of resources, based on 60% equity, this acquisition will increase the amount of equity resources by 304000 tons of LCE. (2) In terms of resource potential, according to the company’s announcement, the Canadian lithium project has the potential to roughly explore and discover super large spodumene reserves. In addition, the super lithium company will continue to seek acquisition opportunities for high-quality hard rock lithium resources for the joint venture, lithium bearing pegmatite resources with an average lithium oxide grade of 1.0-1.2% or higher, and continue to specifically explore, discover and acquire more Canadian lithium resources for the joint venture. (3) In terms of capacity scale, according to the preliminary results, a lithium concentrate mining and dressing plant with 6% lithium oxide of 200000 tons / year will be designed and built in the first phase, and the continuous operation time will not be less than 10 years. In the later stage, the capacity will be expanded to 400000 tons in the second phase according to further detailed exploration. (4) At the governance level, according to the company’s announcement, the board of directors of the joint venture will have five members, three of whom will be nominated by Yahua international and two by ultra lithium. The company has a controlling stake in the lithium mining projects of Fugen lake and Georgia lake, and may be dominant in promoting the progress of the project in the future.
The company is optimistic about the long business cycle of lithium industry and the growth of resource guarantee system. In the short term, according to the company’s announcement, there are mainly 120000 T / a package sales of MT cattlin, as well as shares in lithium mine Lijiagou and MT Finniss, which will be put into operation successively this year. In the medium and long term, at present, the company has established a joint venture with Eastern iron to jointly develop trigger Hill Lithium Tantalum project, successively participate in EV company, aby company, Oceana company to be invested and ultra lithium company to be invested, and acquire the controlling shares of Fugen lake and Georgia lake lithium projects in cash. The company participates in the development of Greenland lithium project and may contribute considerable lithium raw materials in the future.
The smelting capacity is considerable, and the performance may be released continuously. According to the company’s announcement, the company has a capacity of 43000 tons of lithium salt (including 33000 tons of lithium hydroxide and 6000 tons of lithium carbonate). 30000 tons of battery grade lithium hydroxide in Ya’an phase I is expected to be completed by the end of 2022, and the remaining 20000 tons will be started after phase I is put into operation. The company’s lithium hydroxide products have been embedded in Tesla‘s supply chain and are expected to supply 4680 batteries in the future. The smelting capacity may continue to be released. Previously, the Q1 performance forecast in 2022 showed that the parent company’s profit in the quarter was RMB 900-1.2 billion, a year-on-year increase of more than 10 times, or more than the annual profit of last year. With the company’s synchronous layout of smelting and resource side, the future performance may continue to be released.
Investment suggestion: we expect the company’s operating revenue to be 5.233 billion yuan, 13.466 billion yuan and 16.53 billion yuan respectively from 2021 to 2023, and its net profit to be 925 million yuan, 3.806 billion yuan and 4.671 billion yuan respectively, corresponding to EPS of 0.8, 3.3 and 4.03 yuan / share respectively. At present, the corresponding PE share price is 39.1, 9.5 and 7.8 times. Maintain the “overweight-a” rating, and the six-month target price is 42 yuan / share.
Risk tip: lithium price is lower than expected, demand is lower than expected, and the progress of acquisition and project is lower than expected
