\u3000\u3 China Vanke Co.Ltd(000002) 240 Chengxin Lithium Group Co.Ltd(002240) )
Event: the company released the first quarter report of 2022, and 22q1 company achieved an operating revenue of 1.687 billion yuan, a year-on-year increase of 213%; The net profit attributable to the parent company was 1.07 billion yuan, a year-on-year increase of 901%; Deduct non net profit of 1.069 billion yuan, an increase of 982% year-on-year.
The net profit attributable to the parent company of 22q1 exceeded that of 2021, and the volume and price of lithium salt products rose together to help release the performance. The company realized a net profit attributable to the parent company of 1.07 billion yuan in 22q1, which exceeded that of 850 million yuan in 2021. The main reasons are as follows: 1) volume: the company’s production capacity has expanded steadily. Suining lithium hydroxide project with an annual output of 30000 tons was completed and put into operation in January, and Q2 is expected to reach full production, bringing profit increment; 2) Price: during the reporting period, the price of lithium salt was strongly supported by the relationship between supply and demand, and the average market price remained at a high level of more than 400000, driving the release of the company’s performance.
The gross profit margin and net profit margin of sales increased significantly, the expense rate decreased during the period, and the profitability increased significantly. The gross profit margin of 22q1 company’s sales increased by 79.71% and 22.61pct month on month; The net profit margin on sales was 62.97%, up 32.59pct month on month. During 22q1, the rate of four expenses was 3.50%, down 3.01pct month on month. The main reasons are: 1) the company’s operating revenue increased significantly during the reporting period; 2) In absolute terms, the company’s expenses also decreased. On the whole, the profitability and operation and management ability of the company have been significantly improved.
Subscribe for the non-public offering shares of Chilean lithium industry and the pre abyipo equity, and overweight the global layout of lithium resources
1) in April 2022, the company exercised the previously allocated warrants and continued to subscribe for 29.3 million non-public shares of Chilean lithium industry, with a cumulative investment of 175 million yuan and a shareholding ratio of 19.85%. It is the largest shareholder; 2) Subscribe for 3.75 million shares of Australian aby company, accounting for 3.4% of the total share capital before IPO. At the same time, sign the underwriting and sales agreement, which stipulates to provide no less than 60000 tons of lithium concentrate in the first contract year and 60 Faw Jiefang Group Co.Ltd(000800) 00 tons of lithium concentrate every year in the remaining contract years. If aby has excess lithium concentrate, it can provide additional lithium concentrate. Aby holds kenticha lithium mine in Ethiopia (51% equity). 67.4 million tons of lithium resources have been proved in the mine, and the Li2O grade is 1.03%, The operation team is Galaxy lithium. The phase I 200000 t / a lithium concentrate production line will be delivered in 23q2.
The company has increased its global distribution of lithium resources. It is expected that the self supply rate of lithium ore will continue to increase in the next two years, and the profitability will be enhanced accordingly.
Investment suggestion: Based on the continuous overweight layout of the company’s resource side, the capacity of lithium salt side continues to be realized and the operation and management ability is improved. The net profit attributable to the parent company in 22 / 23 / 24 years is increased to RMB 3.5227/5.211/6.502 billion respectively, and the corresponding PE is 11 / 7 / 6 times respectively, maintaining the “buy” rating.
Risk tip: the production capacity is not progressing as expected; Falling product prices; Downstream demand was lower than expected.
