\u3000\u3000 Sinomine Resource Group Co.Ltd(002738) (002738)
Core view:
Investment Event: the company issued a performance forecast for 2021. In 2021, the company is expected to realize a net profit attributable to shareholders of listed companies of RMB 500 million-560 million, with a year-on-year increase of 186.92% - 221.35%; It is estimated that the net profit after non deduction will be RMB 488 million to RMB 548 million, with a year-on-year increase of 221.10% - 260.57%; It is expected to achieve basic earnings per share of RMB 1.56-1.75.
The accelerated rise of lithium price and the gradual release of new capacity of lithium salt helped the company's Q4 performance increase significantly. In the single quarter of 2021q4, the company expects to achieve a net profit attributable to shareholders of listed companies of RMB 198 million-258 million, with a year-on-year increase of 167.57% - 248.65% and a month-on-month increase of 53.49% - 100%. During the reporting period, driven by the strong demand for downstream new energy vehicles, lithium prices accelerated. According to the statistics of Baichuan Yingfu, the prices of battery grade lithium carbonate and lithium hydroxide in China increased from 185300 yuan / ton and 186300 yuan / ton at the beginning of October 2021 to 282400 yuan / ton and 234300 yuan / ton at the end of December; In 2021q4, the average price of battery grade lithium carbonate in China reached 209200 yuan / ton, up 377.11% year-on-year and 72% month on month; The average price of battery grade lithium hydroxide reached 201500 yuan / ton, up 252.49% year-on-year and 54.22% month on month. The company's 25000 ton lithium salt production line was put into operation in August 2021, and the battery grade lithium hydroxide products produced in the fourth quarter were sold, becoming the main growth point of the company's 2021q4 performance. In addition, under the prosperity of the lithium battery industry chain, the shortage of lithium hexafluorophosphate drives the rise of the price of lithium fluoride, its upstream raw material, and the steady growth of the company's cesium salt business under the optimization of product results, which also supports the substantial release of the company's performance.
A comprehensive breakthrough has been made in the integration of lithium salt industry chain, and the effect of continuously overweight lithium battery track has been shown. The company is expected to enter the performance acceleration upward period. The production and sales of downstream new energy vehicles continue to be strong, driving the demand for lithium, while the effective output that can be released by the new capacity of upstream lithium resources in 2022 is still small. It is expected that global lithium resources will still be in short supply in 2022, the supply gap of global lithium industry will further expand, and the price of lithium salt is expected to remain high, And with the intermittent disturbance of supply and the seasonal expansion of consumption, there is the possibility of further explosive rise. The company has stepped up the lithium salt track, and the new capacity of 25000 tons of lithium salt has been put into production, realizing the breakthrough of the company's lithium carbonate and lithium hydroxide business from "0" to "1". By the end of 2021, the company has completed the technical transformation project of expanding the capacity of 3000 tons of lithium fluoride to 6000 tons, which will further consolidate the leading position of China's lithium fluoride Market. In addition, the company extends to the lithium mine upstream of the industrial chain to ensure the supply of lithium resources. The 120000 ton spodumene mining and beneficiation capacity of the company's own mine, Tanco mine in Canada, was officially put into operation in October 2021 (it has basically reached the production capacity at present), and plans to actively promote the open-pit mining scheme of Tanco mine and build a 500000 ton concentrator. The gradual release of the company's new lithium salt production capacity, the improvement of the self-sufficiency rate of lithium concentrate resources and the catalysis of strong lithium price will bring huge increments to the company's future performance, raise the company's growth and profitability to a new level and enter a period of high performance growth.
Investment suggestion: as a leading enterprise in overseas geological exploration, a global leader in cesium and rubidium resources, a leader in lithium fluoride in China, and an overweight lithium battery core track, the company's new lithium salt production capacity is expected to contribute a huge performance increment by taking advantage of the east wind of lithium battery and enter a period of high performance growth. The breakthrough of the company's layout and development in the field of lithium resources and the expansion of lithium ore production in Tanco mine will also extend the integration of the company's lithium industry chain to the upstream, improve the self-sufficiency rate of lithium resources, and transform from a simple lithium processing enterprise to a lithium resource mining and processing enterprise. The company's valuation is also expected to be improved and close to a lithium resource enterprise with higher valuation level. It is estimated that the company's net profit attributable to shareholders of listed companies from 2021 to 2023 will be RMB 547, 1669 and 1971 million, corresponding to EPS of RMB 168, 514 and 6.06 from 2021 to 2023 and PE of 34x, 11x and 9x from 2021 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 release of new production capacity of the company is less than expected; 4) Insufficient supply of lithium concentrate resources of the company; 5) Cesium rubidium salt prices fell sharply.
