\u3000\u30 Shenzhen Quanxinhao Co.Ltd(000007) 62 Tibet Mineral Development Co.Ltd(000762) )
Main points:
Company events
The company issued 2021 annual report and 2022q1 quarterly report. In 2021, the company achieved an operating revenue of 644 million yuan, a year-on-year increase of 68.18%, a net profit attributable to the parent of 140 million yuan, a year-on-year increase of 388.89%, and a net profit attributable to the parent after deduction of non-profit of 112 million yuan, a year-on-year increase of 302.98%. In 2022q1, the company achieved an operating revenue of 553 million yuan, a year-on-year increase of 159.18%, a net profit attributable to the parent of 132 million yuan, a year-on-year increase of 557.72%, and a net profit attributable to the parent after deduction of non-profit of 126 million yuan, a year-on-year increase of 519.8%.
The volume and price of the two main products have risen simultaneously, contributing to the high growth of the company’s performance
1) lithium salt business: in terms of production and sales, the company produced 9016 tons of lithium concentrate in 2021, with a year-on-year increase of + 96.00%, and sold 408.05 tons, 303.78 tons, 783.35 tons and 637049 tons of industrial grade lithium carbonate, battery grade lithium carbonate, lithium hydroxide and lithium concentrate respectively, with a year-on-year increase of + 196.59%, + 100%, + 115.68% and + 169127%; In terms of price, benefiting from the high prosperity of the industry, the price of lithium salt has increased significantly. In 2021, the average market price of battery grade lithium carbonate in China was about 122600 yuan / ton, a year-on-year increase of + 168.9%, and now it has risen to 475400 yuan / ton; At present, the average price of lithium / hydrogen oxide is about 1.209 million tons / year on year, up to about 1.2 million tons / year. 2) Chromium business: during the reporting period, the company’s production and sales scale of chromium products increased. In 21 years, the company produced 141000 tons of chromium products, a year-on-year increase of + 24.2%; 149000 tons of chromium products were sold, with a year-on-year increase of + 35.6%, of which 139000 tons of self-produced chromium ore were sold, with a year-on-year increase of + 632.7%.
Actively promote the process of lithium salt release
The company seizes the opportunity of new energy market and actively promotes the development process of Salt Lake: ① Zabuye phase I optimization project plans to expand the production to 10000 tons of lithium concentrate (grade 50% – 70%); ② Restart the construction of Zabuye phase II project and implement the 10000 ton battery grade lithium carbonate project, which is expected to be completed in July 2023 and put into operation in September 2023; ③ A 100 ton lithium hydroxide pilot scale technical transformation contract has been signed with Jiangsu Jiuwu Hi-Tech Co.Ltd(300631) and different process routes are being verified. After the pilot scale test is successful, the construction of 10000 ton lithium hydroxide project will be considered. With the steady release of lithium salt production capacity, the company’s performance growth will be guaranteed.
The company issued a five-year strategic plan to continuously achieve high-quality development
The company will speed up the strengthening and expansion of the main mineral industry. In terms of chromium products, the company plans to increase the output through exploration, reconstruction and integration, expand the output by 150000 tons in 2022 and 200000 tons / year of chromium ore in 2023, so as to create an industrial card of “chromium capital of China”, with the goal of becoming a clean energy steel and iron demonstration enterprise. In terms of Salt Lake, the company will promote the follow-up development of lithium extraction from Zabuye Salt Lake in Tibet, integrate the salt lake resources in the region, continue to carry out new process research and development, and form a scale of 3 Tianma Microelectronics Co.Ltd(000050) 000 tons of lithium salt by the end of 2025. In addition, in the five-year plan, the company has established five investment plans with a total amount of 785 million yuan and a fixed asset investment scale of 6.151 billion yuan to provide financial guarantee for resource development and industrial chain layout.
Investment advice
We expect the company’s revenue from 2022 to 2024 to be RMB 1.86/23.1/3.26 billion, with a year-on-year increase of 188.0% / 24.6% / 40.9%; The net profit attributable to the parent company was 7.1/8.0/1.22 billion yuan, with a year-on-year increase of 407.5% / 12.3% / 52.5% respectively; The current share price corresponds to PE of 25X, 23x and 15x, maintaining the “buy” rating.
Risk tips
The price fluctuation risk of lithium salt, chromite and other main products, the progress of the company’s projects under construction is less than expected, and the market demand is less than expected.
