\u3000\u3000 Ganfeng Lithium Co.Ltd(002460) (002460)
Investment Event: the company released the performance forecast for 2021. In 2021, the company is expected to realize a net profit attributable to shareholders of listed companies of RMB 4.8 billion-5.5 billion, with a year-on-year increase of 368.45% – 436.76%; It is expected to realize a net profit of RMB 2.9 billion to RMB 3.6 billion after deduction, with a year-on-year increase of 621% – 795.04%; The basic earnings per share is expected to be 3.43 yuan -3.93 yuan.
Lithium volume and price rose simultaneously, and the company’s Q4 performance exceeded expectations. In the single quarter of 2021q4, the company expects to realize a net profit attributable to shareholders of listed companies of RMB 2.327 billion-3.027 billion, with a year-on-year increase of 235.30% – 336.17% and a month-on-month increase of 120.36% – 186.65%; After deduction, the net profit attributable to shareholders of listed companies was 1.472 billion yuan – 2.172 billion yuan, with a year-on-year increase of 982% – 1497% and a month-on-month increase of 148.23% – 266.27%. The company’s extraordinary profit and loss of RMB 855 million in 2021q4 mainly comes from the changes in fair value caused by the rise of Pilbara share price held by the company. 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 sharp rise in the price of lithium salt products has greatly increased the profitability of the company. It is expected that the net profit of the company per ton of lithium salt in 2021q4 will reach more than 70000 yuan. The release of 50000 tons of new capacity of lithium hydroxide in Mahong phase III of the company and the output increment brought by the technical transformation and upgrading of 17500 tons of battery grade lithium carbonate production line in Ningdu to 20000 tons of capacity also increase the flexibility of the release of the company’s performance.
Comprehensive layout of upstream resource development, breakthroughs in downstream solid-state batteries, and the company accelerated the construction of lithium ecosystem. The company actively promotes the development and construction of 40000 ton lithium carbonate project of cauchari olaroz lithium salt lake in Argentina. It is expected to be put into operation in the middle of 2022, which will bring considerable increment to the company under the high lithium price and improve the company’s resource self-sufficiency rate. In addition, the company made a tender offer for bacanora company, holding 100% of Sonora lithium clay mine in Mexico, and accelerated the construction of 20000 ton lithium hydroxide project of Sonora lithium clay phase I; The company indirectly holds the rights and interests of goulamina spodumene mine project in Mali, Africa and obtains the underwriting right through the acquisition of 50% equity of SPV company in the Netherlands; The company acquired the remaining 8.58% equity of LiTiO, thus owning all the interests of Mariana Salt Lake project, and the 20000 ton lithium chloride project was approved by EIA; In China, the company plans to acquire 49% shares of Minmetals salt lake with its own capital of 147 million yuan. Minmetals Salt Lake has Qaidam Yiliping lithium salt lake project with a capacity of 10000 tons of lithium carbonate. The first batch of 50 Dongfeng E70 electric vehicles equipped with Ganfeng solid-state batteries using solid electrolyte diaphragms and other solid-state materials by the downstream company were officially delivered, which made a major breakthrough in the downstream solid-state batteries of the company’s industrial chain and improved the ecological construction of the company’s lithium industrial chain.
Investment suggestion: under the continuous prosperity of the new energy vehicle industry chain, the shortage of lithium resources remains, and it is expected that the lithium price probability will run at a high level in 2022. As the leader of the global lithium industry, the company will accelerate the layout of upstream resources to improve the self-sufficiency rate of resources and the market share of the lithium industry in the future, and will fully enjoy the growth trend of new energy lithium battery and the release performance of lithium price boom. The breakthrough of the company’s downstream solid-state battery is also conducive to the company to improve the construction of lithium industry chain ecosystem and improve the valuation level. It is estimated that the company’s net profit attributable to shareholders of listed companies from 2021 to 2023 will be 5.24, 10.27 and 11.43 billion yuan, corresponding to EPS of 3.65, 7.15 and 8.65 yuan from 2021 to 2023 and PE of 37x, 19x and 17x 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 the company’s new production capacity was less than expected.
