\u3000\u3 China Vanke Co.Ltd(000002) 497 Sichuan Yahua Industrial Group Co.Ltd(002497) )
Event: on April 23, the company released its 2021 annual report and 22q1 quarterly report: 1) in 2021, the company achieved a revenue of 5.241 billion yuan, a year-on-year increase of 61.3%; The net profit attributable to the parent company was 937 million yuan, a year-on-year increase of 189.2%; Net profit deducted from non parent company was 919 million yuan, with a year-on-year increase of 207.1%. 2) In 2021q4, the company achieved a revenue of 1.795 billion yuan, an increase of 73% year-on-year and 35.9% month on month; The net profit attributable to the parent company was 304 million yuan, a year-on-year increase of 134.2% and a month on month increase of 0.7%; Net profit deducted from non parent company was 307 million yuan, with a year-on-year increase of 154.7% and a month on month increase of 3.9%. The performance is in line with expectations. 3) In 2022q1, the company achieved a revenue of 2.66 billion yuan, an increase of 210.2% year-on-year and 48.1% month on month; The net profit attributable to the parent company was 1.022 billion yuan, with a year-on-year increase of 1210% and a month on month increase of 235.9%; The net profit deducted from non parent company was 1.015 billion yuan, with a year-on-year increase of 1301% and a month on month increase of 230.5%. At the same time, the company plans to distribute a cash dividend of 0.30 yuan (including tax) to all shareholders for every 10 shares.
The volume and price of lithium products have risen simultaneously, thickening the performance. 1) Volume: the production and sales of lithium products are booming. In 2021, the company produced 27300 tons of lithium products, a year-on-year increase of 149.69%; The sales volume of lithium products was 29100 tons, with a year-on-year increase of 66.82%. 2) Price: the industry is booming, and the price of lithium is rising. The average sales price of lithium salt of the company in 2021 was 84700 yuan / ton, which was 64.47% higher than that of 51500 yuan / ton in 2020. 3) The price of 22q1 lithium salt remained high, and the company entered the fast lane of profitability: the company’s 22q1 performance was outstanding, and the net profit in a single quarter exceeded the net profit of the whole year in 2021. The main reason was that the price of 22q1 lithium salt remained high. At the same time, the company ensured that the price increase of raw materials was lower than the market through long-term cooperation and other means, so as to effectively reduce production costs.
The global layout of lithium resources has been continuously improved, and the supply capacity of lithium resources has been upgraded again. We estimate that the company’s future lithium ore is expected to reach 695 Henan Shuanghui Investment & Development Co.Ltd(000895) 000 tons / year, and the long-term lithium resources are expected to fully match the smelting capacity. 1) The company renewed the lithium concentrate underwriting agreement with Galaxy lithium, and the annual underwriting of lithium concentrate will not be less than 120000 tons by 2025. 2) The company shares 37.25% of the energy investment lithium industry, owns the mining right of Lijiagou spodumene mine, and has an annual production capacity of 180000 tons of lithium concentrate. 3) The company has participated in core Australia and signed a lithium concentrate underwriting agreement, which is expected to reach production in Q4 in 2022. 4) The company holds 4.6% equity of EFE Australia and will continue to jointly develop lithium resources through joint venture. 5) The company holds 9.5% equity of EVR Australia. EVR owns lithium resources projects such as Xiaohe lithium tin tantalum project in Australia and weinbeni project in Austria. The company will jointly develop the above projects with EVR Australia. 6) The company participated in 3.4% equity of aby company in Australia and signed the off take and sales agreement of lithium concentrate. 7) The company shares 13.23% of the equity of Canadian super lithium company, acquires 60% of the equity of its wholly-owned subsidiary, and controls the Fugen lake hard rock spodumene lithium mine project and the Georgia lake hard rock spodumene lithium mine project.
The performance of the contract with Tesla is opened, and it is expected to benefit from the high-capacity of 4680 batteries. The company is the main supplier of lithium hydroxide raw materials for Tesla 4680 battery. The contract has been fulfilled for 24.91 million yuan in 2021, and the amount to be fulfilled is 626 ~ 876 million US dollars. With the upcoming mass production of 4680 batteries, the company’s shipment is expected to grow rapidly.
Investment suggestion: considering that the lithium price is expected to remain high for a long time and the layout of lithium resources of the company continues to advance, we expect the net profit attributable to the parent company from 2022 to 2024 to be RMB 3.812 billion, 4.284 billion and 4.808 billion. Based on the closing price on April 22, 2022, the corresponding PE is 8x, 7x and 7x respectively, maintaining the “recommended” rating.
Risk tips: the demand is less than expected, the price of lithium has fallen sharply, and its own projects are less than expected.
