\u3000\u3000 Sunresin New Materials Co.Ltd Xi’An(300487) (300487)
On January 3, 2022, the company announced that it had received the signing notice of 10000 ton lithium carbonate EPC procurement project of Jinhai lithium industry, and on January 11, 2022, the company announced that it had signed the entrusted processing contract of 10000 ton lithium hydroxide in Chaka Salt Lake, Jieze, Tibet with Guoneng mining. At the same time, the company signed a strategic cooperation agreement with Eve Energy Co.Ltd(300014) to establish an innovative model of in-depth cooperation between technology and industry to develop emerging resources.
Key points supporting rating
Salt lake lithium extraction has repeatedly won new orders, which is expected to continue to contribute to performance increment. The 10000 ton lithium carbonate EPC procurement project between the company and Jinhai lithium industry (Qinghai) is expected to be put into operation on October 30, 2022, with a contract amount of 456 million yuan, accounting for about 49.43% of the total audited operating revenue in 2020. Qinghai project is expected to contribute part of its revenue and continue to increase its volume in 2022. The 10000 ton lithium hydroxide entrusted processing project of Tibet Jieze Chaka Salt Lake is expected to complete the construction of 10000 t / a lithium hydroxide production line by December 2023. The entrusted processing period is 15 years from the date when the project reaches the production standard and the performance assessment of both parties is qualified. The total output of lithium hydroxide products produced by the project is not less than 150000 tons. Tibet project is expected to provide stable income for the company and continuously optimize cash flow.
The products and technologies have been recognized by lithium battery enterprises. The strategic cooperation with Eve Energy Co.Ltd(300014) will continue to empower the company’s Salt Lake Lithium business. In January 2022, the company signed a strategic cooperation agreement with Eve Energy Co.Ltd(300014) with a tentative cooperation period of 15 years, which is conducive to the company’s implementation of the lithium extraction project from salt lake brine in Tibet and the introduction of technology and products into mainstream battery manufacturers. Eve Energy Co.Ltd(300014) will establish a long-term, stable and close strategic partnership with the company, conduct in-depth cooperation and layout in the lithium resource industry chain, and actively participate in the development and utilization of lithium resources in Chaka Salt Lake, Jieze, Tibet.
The pioneer in extracting lithium from raw halogen, and the experience in material R & D and engineering build technical barriers. The 10000 ton lithium carbonate EPC procurement project of the company and Jinhai lithium industry is expected to adopt the original halogen lithium extraction method, which is expected to greatly shorten the production cycle and improve the yield. The company has the industrialization capacity of extracting lithium from raw halogen. This project will become the first industrialized 10000 ton raw halogen lithium extraction project in China. In other hydrometallurgy fields, the successful start-up of the company’s Congo (DRC) such as wasiti cobalt project will add more than 300 tons of cobalt products per year to Jinchuan such as Wasi project. Years of experience in material R & D and engineering will consolidate the company’s leading position in metal resource extraction technology.
Valuation
Based on the continuous volume of salt lake lithium extraction project, it is estimated that the company’s earnings per share from 2021 to 2023 will be RMB 1.43, RMB 1.84 and RMB 2.38 respectively, and the corresponding PE will be 64.2 times, 50.0 times and 38.6 times respectively, maintaining the overweight rating.
Main risks of rating
The progress of salt lake lithium extraction project is less than expected, the new production capacity is less than expected, the epidemic situation is repeated, and the demand for adsorption and separation materials is less than expected.
