The rapid expansion of profits and the continuous adjustment of the share price in the secondary market have gradually turned the exaggerated valuation level of lithium stocks into an advantage.
The valuation of the A-share market can be up to 100 times and down to less than 10 times. At this stage, lithium stocks are constantly moving closer to the latter.
A total of 14 stocks were included in the lithium mine index. If you add Zangger mining and Keda Industrial Group Co.Ltd(600499) , as of April 20, 11 companies have released performance forecasts for the first quarter.
Excluding the highest and lowest values, the average growth rate of the company’s expected net profit in the first quarter, including Qinghai Salt Lake Industry Co.Ltd(000792) , Chengxin Lithium Group Co.Ltd(002240) etc., is 624% and the median is 761%.
21st Century Capital Research Institute noted that the above rapidly expanding profits, combined with the continuous adjustment of the share price in the secondary market, are gradually turning the originally exaggerated valuation level of lithium stocks into advantages.
Just take Qinghai Salt Lake Industry Co.Ltd(000792) as an example. The median net profit in 2021 is expected to be 4.08 billion yuan, which is expected to reach 3.5 billion yuan in the first three months of this year.
After the disclosure of performance forecast data, each seller’s organization also raised its annual profit expectation one after another. However, the valuation value per share is about 12.26 billion yuan, which is equivalent to the lowest valuation value.
This is not an example. According to the above profit expectations, many other stocks in the sector are only valued at more than 10 times.
industry leader’s first quarterly report to be announced
From the performance forecast announcement, the profit scale of lithium mining stocks in the first quarter can be divided into 3 billion yuan, 2 billion yuan, 1 billion yuan and below.
Among them, Qinghai Salt Lake Industry Co.Ltd(000792) estimated net profit exceeded 3 billion yuan, which was mainly driven by potassium chloride and lithium carbonate. The former also increased by nearly 1000 yuan / ton in the first quarter.
Among other companies, except Suzhou Ta&A Ultra Clean Technology Co.Ltd(300390) relying on its subsidiary Tianyi lithium, the net profit is expected to reach 1.5 billion yuan, Sichuan Yahua Industrial Group Co.Ltd(002497) , Chengxin Lithium Group Co.Ltd(002240) and other companies’ predicted profits are generally about 1 billion yuan or less.
It should be pointed out that the first quarter is not the traditional peak consumption season of downstream industries. The improvement of profitability of Companies in the current period is mainly driven by the price level.
Let’s start with lithium carbonate. At the beginning of January this year, the average market price of battery grade products was about 280000 yuan / ton, which had approached 520000 yuan / ton in early March, which led to a significant increase in the average price of lithium carbonate in that quarter.
According to the statistical results of Shanghai Nonferrous Metals, the average price of domestic battery grade lithium carbonate was 75000 yuan per ton in the first quarter of 2021 and 210000 yuan in the fourth quarter of 2021. By the first quarter of this year, the average price had increased to 420000 yuan.
Salt lake lithium extraction and some “integrated” production enterprises, due to the high self-sufficiency of raw materials and the stability of the cost side, all the above price increases are also converted into the net profit of the enterprise.
This growth logic is also applicable to lithium hydroxide, and the market performance at this stage is even better than lithium carbonate.
Baichuan Yingfu database, which tracks hundreds of commodities, shows that as of April 19, industrial grade lithium hydroxide increased by 128.98% compared with the beginning of the year, while industrial grade lithium carbonate increased by 76.7% in the same period
lithium hydroxide “make-up” means that the cost side of ternary battery has also followed the rise in the downstream after the rise in the cost of lithium iron phosphate battery, but it has brought an increase in the actual profit margin to the upstream lithium salt enterprises
Although the industry leader “two giants of lithium industry” has not disclosed the performance forecast of the first quarter, referring to the above product prices and the profit changes of peer companies, Ganfeng Lithium Co.Ltd(002460) , Tianqi Lithium Corporation(002466) profits will also increase significantly.
Referring to the operating data of Ganfeng Lithium Co.Ltd(002460) 1-february, the operating revenue has reached about 3.6 billion yuan, with a year-on-year increase of about 260%, and the net profit after deduction of non-profit is about 1.8 billion yuan, with a year-on-year increase of 1000%.
Tianqi Lithium Corporation(002466) although no specific data are given, the business revenue has increased significantly, including the revenue of lithium concentrate increased by about 366% year-on-year, and the revenue of lithium compounds and their derivatives (lithium salts such as lithium carbonate and lithium hydroxide) increased by about 492% year-on-year.
The two companies have their own characteristics. Ganfeng’s advantage lies in its large production capacity, and its lithium hydroxide production capacity ranks first in the world. Tianqi’s advantage lies in its high self-sufficiency rate of raw materials. The characteristics of “integrated” production are remarkable, and the profit margin will be higher in theory.
When the mystery is revealed at the end of the month, it does not rule out the possibility that the net profits of the above two companies will reach the level of 2 billion yuan.
lithium salt fell “seasonally” and it is difficult to change the growth trend in the second quarter
Since the profit growth of the above companies mainly benefits from the continuous rise of the average price of lithium salt in each quarter, it is also inseparable from the lithium price when predicting the industry profit trend in the second quarter.
However, in terms of the market since April, the price of lithium salt has decreased significantly.
Both Shanghai Nonferrous Metals and Baichuan Yingfu’s commodity database showed that the market price of lithium carbonate fell significantly around April 10.
Baichuan Yingfu data show that on March 10, the price of battery grade lithium carbonate in China reached 517400 yuan / ton, which remained at a high level for about a month, and began to decrease significantly on April 11. By April 20, the average market price of the product had dropped to 475000 yuan / ton
On the contrary, lithium hydroxide also experienced a sideways trend in March, but it rose slightly on April 10.
Recently, there have been some “loose list” quotations of lithium carbonate of sub lithium battery grade in China’s lithium salt spot market, which have fallen to about 450000 yuan / ton.
In this regard, a power battery material enterprise feedback said, “the source price we know is even lower.”
It should be pointed out that China’s lithium salt market has not yet formed a unified spot market price, and the quotation mainly comes from the above-mentioned third-party commodity information institutions. In addition, there are some retail transactions in the trade link, and the overall market quotation is relatively chaotic.
For the recent decline in lithium salt prices, this newspaper reported on April 13 that it was mainly affected by the short-term supply-demand relationship of the industry. Now, China’s lithium carbonate production “hit the bottom” in March, superimposed with the weakening impact of uncontrollable factors in East China.
At the same time, considering the supply changes of the industry itself, the lithium salt price is difficult to perform well in the second quarter of each year, and there will be a “seasonal” decline in most years.
As for the two commodity price peaking signs of “substantial change in medium and long-term supply-demand relationship” and “rupture of upstream and downstream transmission mechanism within the industrial chain”, at present, the medium and long-term supply-demand relationship has not changed, and the high price lithium salt is in the downstream transmission stage. It is necessary to further observe the production and marketing data of new energy vehicles in April and may to determine whether the cost transmission chain is smooth.
21st Century Capital Research Institute believes that although the price of lithium salt has dropped recently, the range is still limited compared with the high base of 500000 yuan / ton.
In addition, considering that the Australian miner plibara will hold the first lithium concentrate auction of the year in the last week of April, the transaction price may be significantly higher than the third auction price in 2021, which will bring obvious cost support to China’s lithium salt plants, and there is little possibility that the lithium salt price will fall sharply in the second quarter.
The change of enterprise profit trend is mainly affected by two factors: volume and price.
In terms of volume, the overall production and sales volume of lithium salt enterprises in the second quarter is expected to increase significantly month on month, such as the 20000 ton lithium carbonate project under Qinghai Salt Lake Industry Co.Ltd(000792) and the 24000 ton lithium hydroxide project of Tianqi Lithium Corporation(002466) quinana phase I in Australia. The production capacity is climbing this year, and the actual output is gradually increasing.
In terms of price, the average market price of lithium carbonate in the first quarter of 2021 was 420000 yuan / ton. Since April, the average market price has exceeded 490000 yuan / ton. As long as the price of lithium salt remains above 400000 yuan in the second quarter, the average price of the current period and the profit scale of listed companies are expected to maintain month on month growth compared with the first quarter.
profit share increase price fell, highlighting the valuation advantage
On September 14, 2021, the wind lithium mine index peaked. Since then, the unilateral downward trend continued to the middle of January this year, and then it was in a state of shock.
As of the closing on April 20, the median decline of 16 constituent stocks included in the statistical sample was 30.65%. Individual stocks such as Ganfeng Lithium Co.Ltd(002460) , Chengxin Lithium Group Co.Ltd(002240) and Suzhou Ta&A Ultra Clean Technology Co.Ltd(300390) fell by more than 40%, and Suzhou Ta&A Ultra Clean Technology Co.Ltd(300390) fell by nearly 55%.
On the other hand, affected by the large-scale realization of the performance growth of the above-mentioned companies, earnings per share is rising rapidly. Falling share prices and rising profits have prompted the rapid repair of the overvaluation of lithium stocks last year.
wind data shows that after excluding Jiangxi Special Electric Motor Co.Ltd(002176) , Youngy Co.Ltd(002192) and Youngy Co.Ltd(002192) with missing data, the average predicted earnings per share of the other 14 constituent stocks in 2022 is 3.84 yuan, and the average closing price (no resumption of rights) on April 20 is 61.9 yuan, equivalent to 16.11 times the average valuation
In addition, taking Qinghai Salt Lake Industry Co.Ltd(000792) as an example, the median net profit of the company in the first quarter of this year is expected to be 3.5 billion yuan, and the median net profit for the whole year of 2021 is expected to be 4.08 billion yuan, corresponding to earnings per share of 0.64 yuan and 0.75 yuan respectively.
Qinghai Salt Lake Industry Co.Ltd(000792) after issuing the performance forecast, the seller’s organization further raised its profit forecast for 2022 from up to 1.81 yuan to 2.26 yuan to 2.67 yuan.
Taking the median of 2.47 yuan and the closing price of 30.1 yuan on April 20, the current valuation of the company is only 12.19 times.
This is not an example. Most stocks in this sector have a similar situation.
Suzhou Ta&A Ultra Clean Technology Co.Ltd(300390) , the consistent profit forecast result of wind seller’s organization is 5.18 yuan per share, and the closing price on April 20 is 60.5 yuan Chengxin Lithium Group Co.Ltd(002240) consistent earnings forecast results of 3.69 yuan per share, closing price of 42.76 yuan on April 20.
Although Ganfeng Lithium Co.Ltd(002460) , Tianqi Lithium Corporation(002466) and Tianqi Lithium Corporation(002466) have not released the performance forecast of the first quarter so far, the expected profit value of 2022 issued by the seller is generally more than 10 billion yuan, corresponding to more than 7 yuan per share.
If the profit data of the first quarter exceeds the expectation, the possibility of further raising the profit expectation of the whole year is still not ruled out.
Of course, the sharp drop in the price of lithium salt, such as falling to the cost line of lithium concentrate processing enterprises, or the decline in the penetration rate of new energy vehicles instead of increasing, will affect the fulfillment of the above performance expectations
21st Century Capital Research Institute believes that the fundamentals of industry have not deteriorated, and the short-term “seasonal” decline of lithium carbonate is a normal fluctuation. For the time being, there is no obvious sign of decline in the prosperity of the industry, and the overall business trend of “lithium ore + lithium salt” industry is still in a high position
As for the stock price, there has been no performance, which is mainly due to factors such as secondary market sentiment and capital, but the decline of valuation level will eventually come to an end.
