\u3000\u30 Shenzhen Quanxinhao Co.Ltd(000007) 92 Qinghai Salt Lake Industry Co.Ltd(000792) )
Event: the company released 2021 financial report and 22q1 quarterly report.
1) in 2021, the company achieved revenue of 14.778 billion yuan, yoy + 5.4%; The net profit attributable to the parent company was 4.478 billion yuan, yoy + 119.6%. In a single quarter, 21q4 achieved a revenue of 3.980 billion yuan, qoq-14.2%; The net profit attributable to the parent company was 763 million yuan, qoq-52.3%.
2) in 22q1, the company achieved revenue of 7.617 billion yuan, yoy + 152.5%; The net profit attributable to the parent company was 3.497 billion yuan, yoy + 340.9%.
The high prosperity of potash fertilizer and lithium salt industry has promoted the simultaneous rise of volume and price in the main industry.
Potash fertilizer: in 2021, the revenue will be 10.811 billion yuan, the sales volume will be 4.7369 million tons, the output will be 5.0296 million tons and the inventory will be 709100 tons; Based on this calculation, the sales unit price of potassium fertilizer is 2282 yuan / ton. 22q1 achieved sales of 1.45 million tons, output of 1.14 million tons, warehouse removal of 310000 tons, and inventory of 476000 tons. The average ex factory price of potassium chloride in Qinghai Salt Lake in Q1 was 3695 yuan / ton, an increase of 505 yuan / ton compared with 3190 yuan / ton in 21q4. The price rise of potassium fertilizer in the first quarter significantly increased the profit per ton, and the stable production combined with abundant inventory realized the high sales volume of 1.45 million tons. Assuming that the cost of potash fertilizer is 1600 yuan / ton, based on the average price of 3500 yuan / ton, potash fertilizer contributes a net profit of 2.755 billion yuan in 22q1.
Lithium salt: in 2021, the revenue is 1.814 billion yuan and the equity sales volume is 9900 tons. Based on this, the sales unit price of lithium carbonate is 183300 yuan / ton. In 22q1, the equity sales volume was 3400 tons, while the spot market price of lithium carbonate was 395000 yuan / ton; It is conservatively estimated that the selling price of lithium salt is 350000 yuan / ton and the cost is 100000 yuan / ton. Lithium salt contributes 860 million yuan in net profit in 22q1.
According to our calculation, the profit contribution of the main potassium lithium industry is 2.755 + 8.60 = 3.615 billion yuan, which is roughly equivalent to the actual report data of 3.497 billion yuan; In fact, the main contribution of Q1’s high profitability still comes from the simultaneous rise in the volume and price of potash fertilizer.
The lack of supply caused by the conflict between Russia and Ukraine continues to push up the price of potassium fertilizer, and the salt lake potassium leader will fully realize its performance
Before the current round of Russia Ukraine conflict, the sanctions against Belarus, the main exporter of potash fertilizer in Europe and the United States, have begun. The price of potassium fertilizer contract will rise to $590 / ton in 2022, which fully reflects the current tight supply of potash fertilizer. With the continuation of the conflict between Russia and Ukraine, the export of Russian potash fertilizer, one of the main producing countries, has also been restricted. As of April 22, the FOB middle price of potassium chloride in northwest Europe, Vancouver, Israel and other places had exceeded US $900 / ton, and the tight supply of potash fertilizer during the year could not be alleviated Qinghai Salt Lake Industry Co.Ltd(000792) as the king of potash fertilizer in China, it has a production capacity of 5 million tons of potassium chloride, and the inventory of 21q4 has reached 710000 tons. The ex factory price has also increased from 3490 yuan / ton at the beginning of the year to 4380 yuan / ton. Driven by strong demand, potash fertilizer is expected to fully realize its performance.
Lithium salt production capacity increased to 30000 tons, enjoying the dividend of rising volume and price of new energy track
The lithium salt production capacity of Lanke lithium, a holding subsidiary, increased from 20000 tons to 30000 tons. In 22q1, the lithium salt output was 6700 tons. At present, it is in the climbing stage of full production of 20000 tons + new production capacity of 10000 tons. The company’s spot price of lithium carbonate remained at a high level of RMB 460000 / ton as of April, which will further increase the current price of lithium carbonate. In addition, the 30000 ton lithium salt project jointly invested by the company and Byd Company Limited(002594) has entered the pilot stage. In the future, the company will form a capacity of 60000 tons of lithium salt, and the old brine after potassium extraction from the salt lake will provide sufficient raw materials for the expansion of lithium salt production of the company.
Investment advice
Benefiting from the high prosperity of potassium and lithium, the company has realized the simultaneous rise of the quantity and price of potassium and lithium by virtue of Chaerhan high-quality resources + years of deep cultivation and mature low-cost technology. We expect that from 2022 to 2024, the company’s net profit attributable to the parent company will be 14.3 billion yuan, 15.6 billion yuan and 15 billion yuan respectively, and the PE corresponding to the current market value will be 10x, 9x and 10x respectively. Maintain the “buy” rating.
Risk tips
The price of potash fertilizer and lithium carbonate is lower than the expected risk; Lithium carbonate production expansion plan is less than expected risk; Policy risks such as ecological environment protection; The management efficiency of the company is lower than the expected risk.
