\u3000\u3000 Qinghai Salt Lake Industry Co.Ltd(000792) (000792)
Event overview: on January 19, the company released the performance forecast for 2021. It is estimated that the net profit attributable to the parent company is RMB 3.88-4.28 billion, a year-on-year increase of 90.24% – 109.85%, deducting the net profit not attributable to the parent company is RMB 3.83-4.23 billion, a year-on-year increase of 78.25% – 96.87%, and the basic earnings per share is RMB 0.7142-rmb 0.7878/share.
Analysis and judgment:
The decline of Q4 sales and bankruptcy liquidation of subsidiaries are the main reasons for the lower performance than expected. In a single quarter, the net profit attributable to the parent company of Q4 was 165 ~ 565 million yuan, with a significant year-on-year increase and turnaround, with a month on month decline of 64.7% ~ 89.7%, and the performance was lower than our expectations. We believe that the reasons for the company’s performance changes are as follows: 1) the sales volume of Q4, the main product, decreased: in 2021, the company’s potassium chloride output was about 5.02 million tons, the sales volume was about 4.65 million tons, and the cumulative storage was about 370000 tons; According to the disclosure of the company and Keda Industrial Group Co.Ltd(600499) , the company’s lithium carbonate output is about 22700 tons and sales volume is about 19200 tons in 2021. We calculate that the company’s Q4 lithium carbonate output is 6400 tons, with a month on month decrease of 17.9%, sales volume is 4200 tons, with a month on month decrease of 44.7%, and the cumulative inventory in 2021 is about 3500 tons. The sales decline and accumulation of potassium chloride and lithium salt affected the performance release of the company in 2021q4. 2) Bankruptcy liquidation and fines of subsidiaries: the bankruptcy liquidation of nitrate industry, an indirect holding subsidiary of the company, is expected to reduce the company’s net profit by about 600 million yuan in 2021; Salt Lake energy, a wholly-owned subsidiary, paid 195 million yuan for ecological environment restoration and treatment and ecological environment damage compensation. It is expected to reduce the company’s profit by about 111 million yuan in 2021, and return the mining income, which will affect the annual profit by 357 million yuan.
The price of potassium chloride and lithium salt is high, and the accumulation of reserves in 2021 may be good for the release of the company’s performance in 2022. As of January 19, 2022, the tax inclusive prices of potassium chloride (57% powder) and potassium chloride (60% powder) in Qinghai Salt Lake were 3350 and 3490 yuan / ton respectively, up 281 yuan / ton compared with the average price of Q4; According to Asia metal network, the average price of industrial grade lithium carbonate including tax is 325500 yuan / ton, up 132700 yuan / ton month on month compared with Q4, an increase of 69%. We believe that the company’s potassium chloride and lithium salt reservoirs have high prices, and the performance release in 2022 is worth looking forward to.
The company’s salt lake lithium production expansion is smooth, and may usher in large-scale production expansion in the future to ensure the company’s future performance growth.
1) the company has formed a “1 + 2 + 3” salt lake lithium extraction project, including Lanke lithium industry, a joint venture with Keda Industrial Group Co.Ltd(600499) , and Salt Lake Byd Company Limited(002594) , a joint venture with Byd Company Limited(002594) . Among them, Lanke lithium industry has reached production capacity in phase I and the production capacity in phase II is climbing, and Salt Lake Byd Company Limited(002594) is in the pilot stage. 2) The company discharges 200000-300000 tons of LiCl of old brine every year, which may support the large-scale expansion of lithium extraction capacity in the future; 3) The company signed the strategic cooperation framework agreement with Gotion High-Tech Co.Ltd(002074) and plans to establish a joint venture to produce lithium iron phosphate and other cathode battery materials and energy storage batteries respectively, so as to ensure the growth of future performance.
The strategic position of food security is prominent, the global potash supply and demand pattern is improving, and the price may be high for a long time, which will significantly benefit the company. In the long run, there are few newly discovered potassium mines, the project production progress is low, and the growth rate of potassium fertilizer supply slows down. However, the contradiction between the continuous growth of population and the decline of per capita cultivated land area will support the long-term demand growth of potassium fertilizer; In the short term, the importance of food in Belarus under sanctions, epidemic and volcanic eruptions is prominent, and the price of potassium fertilizer is expected to remain high.
Investment suggestion: we adjusted the company’s forecast of net profit attributable to the parent company from 2021 to 2023 to 4.017 billion yuan, 7.566 billion yuan and 8.915 billion yuan. Based on the closing price on January 19, 2022, the corresponding PE was 39x, 21x and 18x respectively, maintaining the company’s “recommended” rating.
Risk tip: the prices of potassium fertilizer and lithium salt fell sharply; The production progress of Lanke lithium is lower than expected.
