Tianqi Lithium Industry: Production expansion into the main line of performance growth, maintaining the company's "recommended" rating

Event

Tianqi Lithium released its third quarterly report for 2016. The company achieved operating income of 2.77 billion yuan in the first three quarters of 2016, an increase of 111.96% year-on-year; net profit attributable to shareholders of listed companies was 1.203 billion yuan, an increase of 1864.13% year-on-year; realized earnings per share of 1.22. Yuan, an increase of 1862.92%.

2. Our analysis and judgment

(1) Production expansion helps the company maintain high performance

Due to the impact of the new energy vehicle fraud investigation and the delay of the new round of subsidy policy, China's third-quarter new energy vehicle production and sales growth rate was lower than expected. This effect was also transmitted to the upstream of the industrial chain, causing the price of battery-grade lithium carbonate to fall from RMB 150,000/ton to RMB 130,000/ton in the third quarter, which caused the company's sales gross profit margin to fall from 74.42% in the second quarter to the third quarter. 69.68%. However, the company's Zhangjiagang base increased its production from 900 tons/month to 1,200 tons/month after the completion of the technical reform in May, which increased the company's production and sales of lithium carbonate in the third quarter. The expansion of production has caused the company's single-quarter earnings in the third quarter to fall by only 1% to 457 million yuan in the third quarter, which is still at a high level. With the implementation of a series of policies on new energy vehicles, the pre-emptive impulse market in the fourth quarter is expected to cause the price of lithium carbonate to rebound under the stimulus of demand, and the company's performance still has a growth momentum.

(II) Production growth will become the main line logic of future company growth

Lithium carbonate investment into the second half, the company's performance elasticity extended from the rise in lithium carbonate prices to the expansion of lithium carbonate production. In September, the company announced that it intends to purchase a 2.10% stake in SQM's S-shares held by SCP with its own funds of $209 million, and intends to purchase options for $1 to obtain a purchase within six months of the agreement not to exceed the SCP. The right to sell the Class B equity of SQM. As one of the world's four largest producers of lithium carbonate, SQM produced 38,700 tons of lithium carbonate in 2015. If the purchase is successful, it will further expand the company's resource reserves and production, and will occupy the dominant position in the lithium carbonate market. On the endogenous side, the company plans to raise funds of A$400 million in the future. The lithium hydroxide project with an annual output of 24,000 tons is progressing smoothly. It started construction in Australia in October. The company's strategy of expanding its resources and processing end is clear, and it is expected to further stabilize its low position in the global lithium carbonate industry and lay the foundation for its future performance growth.

3. Investment advice

With the gradual landing of the new energy vehicle policy, the preemptive impulse market will prompt the lithium price to rebound, and the company's fourth quarter results are expected to remain at a high level. The company's extended endogenous expansion will lay the company's future growth logic. We expect the company's EPS for 2016-2017 to be 1.67 yuan and 1.87 yuan, corresponding to 24x and 21x PE in 2016-2017, maintaining the "recommended" rating.

4. Risk warning

1) The price of lithium concentrate and lithium carbonate fell;

2) The production and sales of downstream new energy vehicles are less than expected;

3) The company's extension and lithium hydroxide project process was less than expected.

Nandu Power: Overall performance is in line with expectations, commercial energy storage and power lithium battery business is developing rapidly

We believe that the company's traditional business maintains a steady growth and solid foundation, while the forward-looking business commercial energy storage and power battery business are developing rapidly, and the future performance is expected to exceed expectations, giving a strong recommendation rating. The EPS for 16-18 years is expected to be 0.47, 0.63 and 0.84 yuan, corresponding to 47x, 35x and 26 times for 16-18 years. Give 60 times PE for 16 years and target price of 28.2 yuan.

Risk warning: The development of electric vehicle lithium battery business is lower than expected, and the market is volatile.

Dangsheng Technology: The three-season performance has been increased by 30 times, and the high-nickel ternary materials have been accelerated.

Investment points

Event: On October 1st, the company released the results of the first three quarters of 2016. It is estimated that the company's net profit for the first three quarters of 2016 will be 60-63 million yuan, an increase of 3057.40% - 3215.27%, of which, In the third quarter, the net profit of returning to the mother was 23.5 million yuan - 26.5 million yuan, an increase of 2391.78% -2709.88%.

Main reasons: (1) The demand for lithium battery cathode materials was strong, and the vehicle power multi-materials were produced at full capacity. The sales revenue and sales volume increased significantly year-on-year, and the comprehensive gross profit margin of the products increased year-on-year. (2) The company's consolidated Beijing Zhongding Hi-Tech Automation Technology Co., Ltd. report revenue and profit increased significantly compared with the same period last year.

Lithium battery positive material lead, accelerate the production of high-nickel 622 material: Dangsheng Technology is China's lithium battery positive lead, in the case of rapid growth of new energy vehicle production and sales, lithium battery cathode material business will continue to grow. The company has completed the expansion of the production capacity of high-nickel ternary materials in the first phase of Haimen Phase I and Haimen Phase II. At present, the production capacity of high-nickel 622 materials has reached 2,700 tons/year, and the second-stage design of Haimen Phase II has 4,000 tons of 622 materials, which is expected to be 201. It will be put into operation in May and June of the year. The production line can produce 81 1 materials with higher gross profit. It is expected to complete research and development by the end of next year, and the comprehensive gross profit is expected to further increase.

Decentralized acquisition of Zhongding Hi-Tech, cutting into the field of intelligent manufacturing: The company completed the acquisition of Zhongding Hi-Tech on September 1st, 2015. Zhongding is a high-tech enterprise engaged in the production and sales of multi-station precision rotary die-cutting equipment. It can efficiently realize die-cutting of composite materials and can be applied in the fields of consumer electronics, medical and health, and Internet of Things RFID. Zhongding promised to realize the predicted net profit in 2015-2017, which was 37 million yuan, 43 million yuan and 49 million yuan respectively. In 2012, the net profit of 38.881 million yuan was overfulfilled. It is expected to reach the previous forecast of 43 million yuan this year. Net profit level.

Investment suggestion: The rapid growth of new energy vehicles will drive the demand for lithium battery cathode materials. The company's production line will continue to expand production and upgrade, and the gross profit will gradually increase. Zhongding will increase the company's profits. The company's 2016-2018 EPS is expected to be 0.59 and 1.17 respectively. 1.29 yuan, corresponding to PE of 92.1, 46.2, 41.8 times, continue to give "overweight one A" rating, 6-month target price of 62 yuan.

Risk warning: the promotion of new energy vehicles is not up to expectations, market competition is intensifying, and technical routes are at risk.

Yiwei Lithium Energy: The base stone of lithium primary battery is stable, and the power storage energy is strong.

The cornerstone of the cast lithium primary battery, benefiting the intelligent new wave: the company is China's largest and the world's leading supplier of lithium primary batteries. Lithium primary batteries are the foundation of the company's main business, mainly used in smart meters and other fields. As a key project of the national grid construction, “Four Forms and Ones” has been implemented since last year. This year, it has been intensified and promoted, and it is required to achieve 10 million households. The “four-in-one” project has been launched in many provinces and cities across the country. At present, national smart meters have become popular, but there are still a lot of space for smart water meters, gas meters and heat meters. These meters have a service life of 6-8 years, which is close to the time of replacement. The replacement space will reach 100 billion, which will fully benefit the company.

Parallel to the two routes, power lithium battery expansion to help performance: ternary materials high energy, long battery life and other advantages can be applied in the field of pure electric power, is an important development direction of lithium battery in the future. In 2015, the annual shipment of ternary lithium battery was 4.26Gwh, which accounted for the largest proportion of passenger cars and special vehicles. At the same time, the power battery used in China's plug-in hybrid passenger cars and buses was still based on lithium iron phosphate. The demand is not yet saturated. The company's lithium iron phosphate and ternary materials are in parallel. By the end of next year, the company's total capacity of lithium-ion batteries is 4.5GWh. The company will fully benefit from the heavy-duty new energy vehicles' demand for power lithium batteries.

The policy pushes for gradual clarification, and energy storage will usher in explosive growth: Recently, the National Energy Administration issued a notice to confirm that the electricity storage can participate in auxiliary services, and the promotion of the energy storage industry is gradually clear, and the energy storage industry has exploded. Lithium-ion battery is the most widely used electrochemical battery in the world. It is believed that with the gradual implementation of national policy subsidies, the increasingly mature energy storage technology and the large-scale commercial application, the performance of lithium ion battery in energy storage applications will be greatly improved. .

E-cigarette self-owned brand promotion has achieved remarkable results, and its performance has ushered in high growth: the company's Vaporesso own brand has been pushed to the terminal market, which has gained good reputation and market influence. At the same time, the continued involvement of large tobacco companies in the terminal market, the increasingly concentrated market structure is very beneficial to the company's existing customer structure. The company has realized the entire industrial chain of e-cigarettes and covers the main links of the entire e-cigarette industry.

Earnings forecast and investment suggestion: The company's 2016-2018 EPS is expected to be 0.82 yuan, 1.28 yuan, and 1.62 yuan respectively, and the corresponding dynamic PE distribution is 47 times, 30 times and 24 times. The company's lithium primary battery cornerstone is stable, lithium battery will benefit from the explosive growth of new energy vehicle volume and energy storage, we are optimistic about the company's future development prospects, the first coverage, giving a "buy" rating.

Risk warning: The risk is not up to expectations, and the competition is fierce, which leads to the risk of falling battery unit price.

Xinzhoubang: electrolyte and pharmaceutical intermediates boosted net profit in the first half of the year by 200%

Net profit in the first half of the year increased by over 200%, in line with expectations.

Xinzhoubang released its 2016 semi-annual report. The company achieved revenue of 677 million yuan and net profit of 125 million yuan, up 72.6% year-on-year and 203.3% year-on-year, in line with expectations of previous company announcements.

Benefiting from the rapid growth of new energy vehicles, the lithium battery electrolyte business has contributed to the performance.

In the first half of 2016, the production and sales of new energy vehicles maintained a strong growth momentum. From January to June 2016, new energy vehicles produced 177,000 vehicles and sold 170,000 units, up 125.0% and 126.9% respectively. Benefiting from the rapid growth of new energy vehicle production and sales demand for power lithium-ion batteries, the lithium battery electrolyte business achieved revenue of 347 million, an increase of 104.4% year-on-year, and revenue accounted for more than 50.7% of the traditional capacitor chemicals business. Become the absolute main force of performance contribution. The company's electrolyte capacity is currently 20,000 tons. It is one of the world's leading suppliers of lithium-ion battery electrolytes. Its market share is among the best. It is still possible to expand production in the future. It is also an excellent supplier of Samsung and Sony. In addition, the company In the procurement of lithium hexafluorophosphate has a stable supply advantage, the price has a comparative advantage compared with domestic counterparts. The gross profit margin of the lithium-ion electrolyte business reached 37%, an increase of 9 percentage points year-on-year.

The sales of fluorine-containing pharmaceutical intermediates grew steadily and gradually became the other pole of performance contribution.

The sales of Haisfu, a wholly-owned subsidiary merged in June 2015, was stable. It achieved revenue of 138 million in the same year. In the first half of this year, it achieved revenue of 149 million, accounting for 21.8% of revenue. Heisford's fluorine-containing medicine The gross profit margin of the intermediate business was as high as 61.9%, which increased the average gross profit margin and contributed a lot to the overall operating profit of the company.

In addition, in March 2016, Haysford signed an order of US$20.63 million with its overseas key customer Piramal, and its performance contribution was guaranteed.

All of the capacitor chemicals business is down, and semiconductor chemicals will gradually contribute to profits.

The company is a leading company in capacitor chemicals. Due to the sluggish demand in the downstream capacitor market, in the first half of 2016, the company's capacitor chemicals business achieved revenue of 165 million, down 11.3% year-on-year. Semiconductor chemicals is the company's newly developed business. In the first half of 2016, it achieved revenues of 3.29 million. The company's semiconductor chemicals are mainly used in LCD panels for etching liquids and stripping liquids. The products are mainly supplied by Japanese and Korean companies. . At present, some products of the company have already started the pilot test, and have passed the preliminary review of several customers. It is expected to gradually increase the volume in the third quarter of 2017.

Investment Advice.

The first coverage gives a buy rating. The EPS of the company is expected to be 1.37, 1.84, 2.47 yuan in 2016-2018, and the corresponding PEs are 42.56, 31.72, and 23.67 times respectively. Give 40 times PE for 17 years, and target price of 73.60 yuan.

risk warning.

The promotion of new energy vehicles fell short of expectations, and semiconductor chemicals were put into production less than expected.

Shanshan shares: acquisition of Juhua Kailan layout of lithium hexafluorophosphate, lithium battery material layout expansion

Acquired Kailan to participate in lithium hexafluorophosphate to create profit growth points: Juhua Kailan is one of the few domestic enterprises to achieve stable industrial production of lithium hexafluorophosphate. The planned production capacity is 1000 tons/year, and the first phase of 300 tons/year capacity has been put into production. The expansion of domestic power battery demand drove the price of lithium hexafluorophosphate products to more than RMB 350,000/ton, and the current gross profit margin of the products exceeded 70%. The involvement in the lithium hexafluorophosphate business will create new profit growth points for the company.

The technical barrier of lithium hexafluorophosphate is high, and it is still in a tight state in the next two years: The production process of lithium hexafluorophosphate involves high and low temperature, anhydrous anaerobic operation, high-purity refining, strong corrosion and other factors, and the process is extremely difficult. Therefore, only more than ten companies in the world have completed industrial production with a production capacity of about 15,000 tons/year. It is estimated that the demand in 2016 will exceed 17,000 tons. Lithium hexafluorophosphate has a long expansion period, and supply and demand are still in a tight balance in the next two years. The high gross profit status of products is expected to continue.

Extend the electrolyte industry chain to further complement the lithium battery material layout: Lithium hexafluorophosphate accounts for 40-60% of the cost in the electrolyte, which is the main factor limiting the profitability and capacity utilization of electrolyte companies. Shanshan's electrolyte production capacity reached 19,000 tons. The acquisition of lithium hexafluorophosphate to the upstream industrial chain will synergize with the company's electrolyte business development, improve the profitability of the electrolyte business, and further improve the overall layout of the company's lithium battery materials.

Lithium-ion materials have a solid leading position in the world. The profit growth in the first half of the year has nearly doubled: The company's lithium-ion composite materials production and sales volume is solid in the world, the cathode material is the world's first, the artificial graphite is the first in the world, the world's first, the electrolyte is the fifth in the country. After the Juhua Kailan project is put into production, the company's lithium hexafluorophosphate business will also enter the world's forefront. In the first half of the year, the company's battery materials business realized a profit of 137 million yuan, a year-on-year increase of 193.76%, which became the main driving force for the company's performance growth.

Yanfeng Lithium Industry: Third-quarter profit, strong operating cash flow

Event description

The company released the third quarterly report: (1) The net profit attributable to the mother in the third quarter was 208 million yuan, a year-on-year increase of 518.66%, diluted eps 0.28; (2) the total net profit of the first three quarters reached 486 million yuan, an increase of 474.35%, diluted eps 0.64 (3) 2016 annual performance guidance of 6.26-6.88 billion yuan, an increase of 400%-450%.

Event review

The first three quarters were brilliant, and operating profit increased by 576%. It is estimated that in 2016, 10,000 tons of lithium carbonate and 8,000 tons of lithium hydroxide will be produced and sold. (1) Finance: The company's operating profit and returning net profit in the first three quarters increased by 576% and 519% respectively. It is expected to start from January-September, and the growth in support revenue will increase by 133%. Second, the company from January to September Product structure adjustment, metal lithium and other deep processing products make up, raw material channel optimization support gross profit increased by 302% (but due to price correction, lower in the third quarter), gross profit margin rose to 36%, while the three fees only moderately increased by 38% As a result, the back-end operating profit and net profit are highly flexible. The ROE in the first three quarters reached 17.6%. (2) Production and sales: It is estimated that the company's 2016 target output of lithium carbonate is 10,000 tons, lithium hydroxide is 8,000 tons, and metal lithium is flat. (3) Raw materials: Although the bottleneck of concentrate raw materials has not been completely broken, but there is no shortage of expectations, the inventory has increased by nearly 91% compared with the beginning of the reporting period; we expect to mainly come from SQM old brine (increased import volume, price increase), Ningdu Spodumene ore, recycled materials and other channels.

One of the key points: to completely break the bondage of concentrates and see Mt Marion put into production. (1) Progress: At present, Mt Marion has started mining and crushing, and the coarse circuit has been tested. The follow-up focus is on further installation, commissioning and commissioning optimization of the beneficiation process. Based on the current progress, we expect Mt Marion's first lithium concentrate to be shipped to the Jiangxi Lithium Salt Factory in mid-November this year. The construction of fines circuit (small particles) is expected to be completed in the first quarter of next year. (2) Capacity: Mt Marion plans a total of 200,000 tons of 6% concentrate, 200,000 tons of 4-6% low grade concentrate, which was all underwritten by Qi Feng for the first three years of production. (3) Resources: According to the latest exploration results, the Mt Marion ore resources increased by 28.6% to 77.8 million tons, and the lithium oxide taste was 1.37%.

Focus 2: Extend to the “customer's customers” downstream. We believe that the two accidents this year (the loss of assets from January to September will be 14.53 million yuan) will not shake the company's "upstream and downstream integration" strategy; not only will Philippine invest 228 million to build fully automated polymer battery production Line, the company also plans to raise funds to build a power battery project. In addition to investing in new energy vehicles - Great Wall Huaguan, the company plans to invest nearly 500 million joint ventures to set up new energy industry investment partnerships, and actively expand the industrial layout.

Maintaining the company's “overweight” rating, it is estimated that EPS in 2016-2018 will be 0.92 yuan, 1.35 yuan, and 1.70 yuan respectively. Risk warning: If the global electrification process is low, if the lithium price fluctuates greatly,

Risk warning: If the global electrification process is low, if the lithium price fluctuates greatly, if the Australian mine production progress is low, and macroeconomic and political risks. If the Australian mine production progress is low, as well as macroeconomic and political risks.

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