\u3000\u3 China Vanke Co.Ltd(000002) 756 Yongxing Special Materials Technology Co.Ltd(002756) )
Event: Yongxing Special Materials Technology Co.Ltd(002756) released the annual report of 2021 and the first quarterly report of 2022. The company achieved an operating revenue of 7.199 billion yuan in 2021, with a year-on-year increase of 44.76%; The net profit attributable to the shareholders of the listed company was 887 million yuan, a year-on-year increase of 243.83%; The net profit deducted from non parent company was 764 million yuan, with a year-on-year increase of 322.58%; The basic earnings per share was 2.22 yuan / share, a year-on-year increase of 208.33%. In the first quarter of 2022, the company realized an operating revenue of 2.631 billion yuan, a year-on-year increase of 94.25%; The net profit attributable to the parent company was 811 million yuan, with a year-on-year increase of 553.60% and a month on month increase of 140.91%.
The high prosperity of lithium battery industry has driven the volume and price of lithium salt to rise simultaneously, helping the company’s high performance growth. In 2021, the company’s lithium new energy business developed rapidly, with a significant increase in performance contribution, contributing 52% of the company’s gross profit, an increase of 48pct compared with 2020. The high performance of lithium battery sector is due to the strong demand for downstream new energy vehicles and the continuous shortage of lithium salt supply, which has accelerated the rise of product prices. According to the data of Baichuan Yingfu, the average market price of battery grade lithium carbonate (high-end 99.5% Jiangxi) in 2021 was 124600 yuan / ton, up 174% year-on-year. In 2021, the company’s lithium carbonate output and sales volume were 11387 tons and 11235 tons respectively, with a year-on-year increase of 30% and 17% respectively. The good production and sales made the performance fully benefit from the rise of lithium carbonate price. In terms of resources, the company’s high self-sufficiency rate of lithium mica brings significant cost advantages. The company’s operating cost per ton of lithium carbonate in 2021 is only 43000 yuan / ton (including purchased raw materials). Under the background of the rapid rise of lithium ore price, the raw material cost is controlled at the industry-leading level, so that the gross profit margin of lithium battery sector will increase to 52% in 2021, with a year-on-year increase of 48pct. In the first quarter of 2022, the price of lithium carbonate accelerated upward and further boosted the company’s performance. According to the data of Baichuan Yingfu, the average market price of battery grade lithium carbonate (high-end 99.5% Jiangxi) in 2022q1 reached 428400 yuan / ton, up 464% year-on-year and 102% month on month. 2022q1 company’s lithium carbonate sales volume was 2720 tons, with a year-on-year increase of 5%; In the current period, the net profit attributable to the parent company of lithium battery sector was 720 million yuan, with a year-on-year increase of 2226% and a performance contribution of 89%.
The integration of mining, beneficiation and metallurgy promotes the smooth expansion of lithium salt production capacity, and the multi-dimensional development of lithium battery sector can be expected in the future. The company’s phase II project with an annual output of 20000 tons of battery grade lithium carbonate has been successfully promoted. The first production line has been put into test, and the second production line is expected to be put into use by the end of the second quarter of this year; The supporting 1.8 million T / a beneficiation project has entered the stage of construction completion and equipment installation, and is expected to be put into use in the third quarter of this year; The production scale of Huashan porcelain ore mining license has been changed from 1 million tons / year to 3 million tons / year, and the supporting 3 million tons / year lithium ore technical transformation and expansion project has entered the construction stage and is expected to be completed ahead of schedule. After the completion of phase II project, the total capacity of the company’s own battery grade lithium carbonate will reach 30000 tons / year, providing considerable performance increment in the future. In addition, the first phase of the company’s ultra wide temperature range and ultra long life lithium-ion battery project has been completed, and the samples have passed the customer verification and signed the sales contract, which is expected to become a new profit growth point in the future.
Join hands with upstream and downstream advantages to expand production capacity and consolidate the leading position of lithium mica. As an industry leader in mastering the leading technology of extracting lithium from mica, Yongxing Special Materials Technology Co.Ltd(002756) cooperates with downstream Contemporary Amperex Technology Co.Limited(300750) and upstream Jiangxi tungsten industry to build 50000 T / A and 20000 t / a battery grade lithium carbonate production lines respectively. The raw materials of the cooperative lithium carbonate production lines are provided by Contemporary Amperex Technology Co.Limited(300750) and Jiangxi tungsten industry respectively, and the products are mainly supplied to Contemporary Amperex Technology Co.Limited(300750) or its designated party. The above cooperation will help Yongxing Special Materials Technology Co.Ltd(002756) increase the equity production capacity by 25000t / A and further consolidate the leading position of mica lithium extraction of the company.
Investment suggestion: under the background of tight supply of lithium resources, lithium price is expected to remain high in 2022, Yongxing Special Materials Technology Co.Ltd(002756) multi-dimensional force lithium battery business, continue to expand equity production capacity, and the company’s performance is flexible. It is estimated that the company’s net profit attributable to shareholders of listed companies from 2022 to 2023 will be RMB 4.830 billion and 5.389 billion, corresponding to EPS of RMB 11.90 and 13.27 from 2022 to 2023 and PE of 7.3x and 6.5x from 2022 to 2023, maintaining the “recommended” rating.
Risk tips: 1) the downstream demand for lithium salt has shrunk significantly; 2) Lithium salt prices fell sharply; 3) The construction progress of the company’s new project is less than expected.
