\u3000\u3 China Vanke Co.Ltd(000002) 497 Sichuan Yahua Industrial Group Co.Ltd(002497) )
Event: the company recently released its 2021 annual report and 2022q1 quarterly report. In 2021, it achieved a revenue of 5.241 billion yuan, a year-on-year increase of 61.26%, of which 2021q4 achieved a revenue of 1.795 billion yuan, a year-on-year increase of 73.05% and a month on month increase of 35.87%. The net profit attributable to the parent company in 2021 was 937 million yuan, a year-on-year increase of 189.22%, of which the net profit attributable to the parent company in 2021q4 was 304 million yuan, a year-on-year increase of 134.22% and a month on month increase of 0.67%. In 2022q1, the company achieved a revenue of 2.66 billion yuan, an increase of 210.22% year-on-year and 48.14% month on month; The net profit attributable to the parent company was 1.022 billion yuan, with a year-on-year increase of 121002% and a month on month increase of 235.88%.
Comments:
The volume and price of lithium salt business have risen simultaneously. The annual output of lithium salt in 2022 is expected to be 38000 tons. In 2021, the company’s lithium product business achieved a revenue of 2.466 billion yuan, a year-on-year increase of 265.94%. (1) In 2021, the company’s lithium salt output was 27330 tons and the sales volume was 29136 tons. The corresponding annual sales price was 95600 yuan / ton (the average price of SMM lithium hydroxide in 2021 was 114000 yuan / ton). According to the processing fee of 15000 yuan, the corresponding lithium concentrate cost was calculated to be 650 dollars / ton (the average price of SMM lithium concentrate in 2021 was 915 dollars / ton). (2) Assuming that the company’s profits from civil blasting and engineering blasting remain unchanged and the company’s lithium sales remain unchanged, the company’s profits in 2021q4 are 304 million yuan, the average price of lithium hydroxide is 190000 yuan, the profits in 2022q1 are 1.022 billion yuan and the average price of lithium hydroxide is 29w, and the company’s lithium output is expected to be about 8100 tons / quarter. Considering that the company has stopped working for a period of time during the Spring Festival, the company’s annual output is expected to be 38000 tons. At present, 50000 tons of lithium hydroxide and 11000 tons of lithium chloride projects of the company have been started, and the production capacity is planned to reach 100000 tons in 2025. The company will fully benefit from the dividend of both volume and price.
Underwriting + Lijiagou + participation in Canadian super lithium company, the company’s lithium resources are guaranteed. (1) Yahua and Yinhe lithium renewed the lithium concentrate underwriting agreement. By 2025, Yinhe lithium will provide no less than 120000 tons of lithium concentrate every year. (2) Lijiagou lithium mine, which the company shares, has made steady progress and is expected to be put into operation in 2022. Its lithium mining is given priority to Yahua for production. (3) The company took shares in core Australia and signed a lithium concentrate underwriting agreement. Core is expected to supply lithium concentrate to the company in Q4, 2022. (4) The company shares 13.23% of the equity of Canadian super lithium company, and acquires 60% of the equity of its wholly-owned subsidiary. It controls the Fugen lake hard rock spodumene lithium mine project and Georgia lake hard rock spodumene lithium mine project, with a total resource of 205000 tons of lithium oxide. The first phase will design and build a 200000 t / a lithium oxide 6% lithium concentrate mining and dressing plant, which will continue to operate for no less than 10 years. In the later phase, it is planned to build the second phase to expand the production capacity to 400000 tons. (5) The company also shares in Australia’s EFE and ev companies to jointly develop lithium resources, and shares in Australia’s aby company to underwrite no less than 120000 tons of lithium concentrate.
Entering Tesla industrial chain, the growth can be expected. In December 2020, the company signed a battery grade lithium hydroxide supply contract with Tesla. From 2021 to 2025, Tesla purchased battery grade lithium hydroxide products with a total value of US $630 million to US $880 million from Ya’an lithium industry. According to the announcement, the contract has been performed for 24.91 million yuan in 2021, and the amount to be performed is US $626876 million. With the continuous improvement of the penetration rate of new energy vehicles in the future, the growth of the company can be expected.
The gross profit margin of the company’s civil blasting business and engineering blasting business decreased slightly or increased due to the price of ammonium nitrate. Ammonium nitrate is the main raw material for the production of industrial explosives, and its material cost accounts for about 30% of the company’s operating cost. According to the statistics of Longzhong chemical industry, the average price of 2021q3 ammonium nitrate is 2193 yuan / ton and 2021q4 ammonium nitrate is 2963 yuan / ton, with a price increase of 23%, or for this reason, the gross profit margin of civil blasting and engineering blasting of the company decreased by 7.08pct and 6.61pct respectively. At present, the price of ammonium nitrate begins to stabilize and slightly callback, and the company’s gross profit margin is expected to remain stable in the future.
Investment suggestion: give a “buy” rating, with a target price of 37.6 yuan. It is expected that the net profit attributable to the parent company in 2022, 2023 and 2024 will be RMB 37.62/43.28/5.020 billion respectively, the corresponding EPS will be RMB 3.26/3.76/4.36, and the corresponding PE will be 8.36/7.27/6.27 times. With reference to the valuation of the same industry, 10 times the valuation within 12 months is given, corresponding to the share price of 37.6 yuan. For the first time, give a “buy” rating.
Risk warning: epidemic risk; The implementation progress of the project is less than expected; The demand for new energy is less than expected.
