\u3000\u3000 Sinomine Resource Group Co.Ltd(002738) (002738)
Event overview: on January 15, 2022, the company announced the performance forecast. It is expected that the net profit attributable to the parent company will reach 500-560 million yuan in 2021, with a year-on-year increase of 186.92% – 221.35%, deducting 488-548 million yuan of non net profit, with a year-on-year increase of 221.10% – 260.57%. It is estimated that the net profit attributable to the parent company in Q4 in a single quarter is about 198-258 million yuan, an increase of 53.49% – 100.00% over Q3.
Prices continued to rise, driving the high growth of Q4 performance month on month. According to the data of the passenger Federation, the wholesale sales volume of new energy passenger vehicles from January to December 2021 was 3.312 million, with a year-on-year increase of 181%. Since February, the monthly sales volume of new energy vehicles has increased continuously from 100000 to 505000 in December. The downstream demand is large and the supply constraints of lithium resources are superimposed, driving the lithium salt price to rise continuously. During the fourth quarter, the lithium salt price entered the stage of accelerated rise. According to SMM data, in the fourth quarter, the average price of domestic battery grade lithium carbonate and lithium hydroxide increased by 91% and 60% month on month compared with the third quarter. The price of lithium hexafluorophosphate downstream of the company’s lithium fluoride products also increased by about 30% month on month compared with Q3. The rise in the price of lithium salt products led to the high increase in Q4 performance month on month.
Cesium rubidium industry is a global leader, controlling high-quality resources and providing stable cash flow. Cesium is widely used. Western developed countries are the main consumers of cesium products. The company controls 80% of the world’s high-quality cesium garnet resources, occupies a leading position in the global cesium industry, and is the only global supplier of cesium formate. At present, cesium rubidium business contributes the company’s main profits. According to the interim report data in 2021, the gross profit of cesium rubidium salt business accounts for 62%. With the development and promotion of cesium application in China, the demand space is expected to open in the future. As a global leader, cesium rubidium business is expected to contribute stable cash flow to the company in the future.
Lithium salt capacity expansion + resource supply guarantee promotion, and the profit growth can be expected. Capacity expansion: the company is the largest supplier of battery grade lithium fluoride in China, and its products have entered the Tesla supply chain. The company’s original capacity of lithium fluoride is 3000 t / A, and the capacity has been increased to 6000 T / a after the technical transformation of line 21. The new capacity of 15000 tons of battery grade lithium hydroxide and 10000 tons of battery grade lithium carbonate has been put into trial production in August 2021. In the fourth quarter, the sales of battery grade lithium hydroxide products have been successfully realized, gradually contributing to the performance, and the capacity can be expected in 2022. In terms of resources, the company’s Tanco mine has 112200 tons of Li2O reserves, and its spodumene concentrator with a processing capacity of 120000 tons / year has been put into operation in October 2021. It is planned to build a 500000 tons / year concentrator, which is in the feasibility study stage with the open-pit mining scheme; The company holds 4.72% equity of Arcadia and has the underwriting right of 280000 tons of spodumene concentrate (Li2O grade 6%) and 784000 tons of lithium permeable feldspar concentrate (Li2O grade 4%). With the construction of the company’s own resource exploitation capacity, the guarantee degree of lithium salt production resources of the company will be significantly improved.
Investment suggestion: considering the rising prosperity of the new energy vehicle industry and the continued shortage of lithium resources in the upstream, it is expected that the prices of lithium carbonate and lithium hydroxide will continue to rise. With the production of the company’s lithium salt capacity, the performance is expected to grow rapidly. It is expected that EPS will be 1.76/4.39/5.86 yuan respectively from 2021 to 2023, and the current share price corresponding to PE will be 37 / 15 / 11x respectively, For the first coverage, give a “recommended” rating.
Risk tip: the sales volume of new energy vehicles is lower than expected, and the construction progress of self owned mine projects is lower than expected
