\u3000\u30 Shenzhen Quanxinhao Co.Ltd(000007) 92 Qinghai Salt Lake Industry Co.Ltd(000792) )
Events: (1) the company released its 2021 annual report. In 2021, the operating revenue was 14.778 billion yuan, a year-on-year increase of 5.44%, of which 2021q4 operating revenue was 3.980 billion yuan, a year-on-year increase of 10.58% and a month on month decrease of 14.16%. In 2021, the net profit attributable to the parent company was 4.478 billion yuan, a year-on-year increase of 119.58%, of which the net profit attributable to the parent company in 2021q4 was 763 million yuan, a year-on-year increase of 107061% and a month on month decrease of 52.33%. In 2021, the net profit not attributable to the parent company was deducted by 4.482 billion yuan, a year-on-year increase of 108.57%, of which the net profit not attributable to the parent company was deducted by 550 million yuan in 2021q4, a year-on-year increase of 166967% and a month on month decrease of 69.92%. (2) The company released the first quarterly report of 2022. The operating revenue of 2022q1 was 7.617 billion yuan, a year-on-year increase of 152.5% and a month on month increase of 91.4%. The net profit attributable to the parent company in 2022q1 was 3.497 billion yuan, a year-on-year increase of 340.91% and a month on month increase of 358.3%. In 2022q1, the net profit deducted from non parent company was 3.480 billion yuan, with a year-on-year increase of 343.33% and a month on month increase of 532.23%.
Potash fertilizer and lithium salt business contributed mainly to gross profit. In terms of revenue, the total operating revenue of potash fertilizer and lithium salt business was 10.811 billion yuan and 1.814 billion yuan respectively, with a year-on-year increase of 3.82% and 373.59% respectively, accounting for 73.15% and 12.28% of revenue respectively. In terms of operating costs, the operating costs of potash fertilizer and lithium salt business were 3.405 billion yuan and 544 million yuan respectively, with a year-on-year increase of – 26.33% and + 62.17%, accounting for 57.02% and 9.11% of the total operating costs respectively. In terms of gross profit, the gross profit of potash fertilizer and lithium salt business was RMB 7.406 billion and RMB 1.271 billion respectively, with a year-on-year increase of 27.88% and 2559.3%, accounting for 84.1% and 14.43% of the total gross profit respectively. In terms of gross profit margin, benefiting from the boom in the prices of main products, the gross profit margin of potassium fertilizer business increased by 12.89pct to 68.51% year-on-year, and the gross profit margin of lithium salt business increased by 57.56pct to 70.03% year-on-year.
The low-cost advantage of lithium extraction from Salt Lake is highlighted, and the increase in volume and price boosts the volume of lithium business. (1) Volume: the production and sales of lithium carbonate in 2021 were 22700 tons and 19300 tons respectively, and the production and sales of Q1 were about 7000 tons and 6700 tons respectively. As of 2022, the inventory of Q1 was about 3700 tons. The company has a capacity of 30000 tons of lithium carbonate. With the accelerated release of the capacity of Q2 Salt Lake, it is expected that the performance of lithium business will be further improved. (2) Price: in 2021, the price of lithium carbonate of the company was 94100 yuan / ton (excluding tax), and the price of Q1 rose rapidly. According to SMM, the average price of battery grade and industrial grade lithium carbonate was 422000 yuan / ton and 406000 yuan / ton respectively, with a month on month increase of + 101% and + 104%. (3) Cost: in 2021, the cost per ton of lithium salt is 28200 yuan / ton and the gross profit per ton is 65900 yuan / ton. Based on the annual 450000 yuan / ton (including tax), the gross profit per ton is about 370000 yuan / ton. Under the assumption of high lithium price, the company has significant profit elasticity.
The price of potash fertilizer rose sharply and the profit continued to be realized. (1) Production and sales: the production and sales of potassium chloride are stable. In 2021, the inventory of potassium chloride is 709100 tons, the output of potassium chloride in Q1 is about 1.14 million tons, the sales volume is about 1.45 million tons, and the consumption inventory in a single quarter is about 310000 tons. At present, there are still about 400000 tons in inventory, and the sales volume may increase in 2022. (2) Gross profit per ton: in 2021, the company’s selling price, cost and gross profit per ton of potash fertilizer were 2282 yuan, 719 yuan and 1563 yuan / ton.
Salt lake lithium and potassium fertilizer are the double leaders, and the performance may be released continuously. (1) China’s potash fertilizer is highly dependent on imports. The strategic position of Qinghai Salt Lake Industry Co.Ltd(000792) potash fertilizer is prominent. At the same time, the price of potash fertilizer continues to rise due to the disturbance of Russia Ukraine crisis on the supply side. According to Baichuan Yingfu, the price of potash chloride of the company is expected to rise in May on April 21, 2022. The ex factory price of 60% crystal powder of the benchmark product is 3980 yuan / ton, and the acceptance plus 50 yuan. The profitability of the potash fertilizer sector is expected to be significantly improved. (2) The company’s salt lake lithium extraction capacity has considerable flexibility. The company has an annual production capacity of 30000 tons of lithium carbonate, which is the largest capacity for extracting lithium from brine in China and the world’s leading level. The salt lake Byd Company Limited(002594) 310000 tons of battery grade lithium carbonate project is under pilot test, and another 40000 tons of lithium carbonate capacity is under planning. With the gradual improvement of the strategic position of new energy vehicles in China, the development of lithium resources in China is expected to accelerate.
Investment suggestion: we expect the company’s operating income to be 35.286 billion yuan, 36.418 billion yuan and 38.845 billion yuan respectively from 2022 to 2024, and its net profit to be 15.321 billion yuan, 15.674 billion yuan and 16.264 billion yuan respectively, with corresponding EPS of 2.82, 2.89 and 2.99 yuan / share respectively. At present, the corresponding PE share price is 9.2, 9.0 and 8.7 times. Maintain the “overweight-a” rating, and the six-month target price is 36 yuan / share.
Risk warning: the price of main products is lower than expected, the demand is lower than expected, and the project progress is lower than expected
