Which lithium company is more flexible when the price of lithium carbonate breaks through 200000 yuan? [agency Review]

The price of lithium is rising like a rainbow, doubling twice a year. The price of battery-grade lithium carbonate rose throughout 2021 and recently reached 200,000 yuan / ton, an increase of more than 400% from 40,000 / ton of 2020Q2. The fundamentals are the main drivers of rising prices: the supply of raw materials is tight, demand is strong, and lithium is in short supply.

Supply will remain tight next year and most likely will be lower than expected. The mine increment in 2022 is mainly due to the increase of Greenbushes production capacity, the expected increment of 40-50,000 tons of LCE, and the planned resumption of production of Ngungaju, Wodgina and so on. Domestic mines focus on Lijiagou and lithium mica-Huashan porcelain stone deposit. Overseas salt lakes mainly focus on the projects of Yabao and Ganfeng, and the domestic increment is mainly in Qinghai. Combing out, the increase of global lithium supply in 2022 is about 180000 tons, but it is common for projects to fall short of expectations. Coupled with other disturbances, the actual release is likely to be lower than expected.

Strong demand, more blossoms, persistently high prices. The demand for new energy downstream of lithium power is strong, and the permeability is growing faster than expected; problems such as power consumption, transmission and distribution, fluctuation and so on appear, and the rigid demand for energy storage gradually appears. Other areas will also have extraordinary performance, in the case of limited lithium supply increment, superimposed dual-carbon background drive, the balance of supply and demand is on the shortage side. We estimate that the shortage of lithium salt in 2021amp 2022 is 2.5 tons and 67000 tons respectively, the overall lithium price is easy to rise and difficult to fall, and the average price will be maintained at more than 200000 / ton.

Industry Gaojing demeanor continues, highlight time is coming. The profit of lithium salt sector is still higher than that of lithium mine in the next two quarters, but the profit is gradually tilted towards lithium mine. Standing at the present time, the driver of the lithium plate should focus more on the release of performance. The rise of the lithium price base leads to a price increase that is not as high as it used to be, but the state of high prices and high profits in the industry is expected to be maintained for a long time, and the industry has entered an unprecedented highlight moment. Combing the major companies in the industry, based on the output performance in 2022, from the perspective of price-to-earnings ratio, taking into account the company's position in the industry, future capacity expansion, resource security and other factors, give different factors, and finally calculate the target market value and relative space. According to the comprehensive calculation, we mainly recommend the targets with more space in the future, such as China Mineral Resources, Shengxin Lithium Energy, Tianqi Lithium Industry, Rongjie shares and so on.

Risk tips: mine salt lake project more than expected production; industry policy risk; downstream demand is lower than expected.