Lithium minerals can double by the end of the year! 200 billion lithium salt leading stock price pullback 40%, lithium price press "calm" key after profit prospect?

With the rapid growth of demand for new energy vehicles, the lithium resource market continues to be tight, and lithium mining has increasingly become the key to the development of related enterprises. Ganfeng Lithium Industry, the leader of lithium resources, announced in the evening that the company and its partners intend to upgrade the ore processing capacity of the joint venture company RIM's Mt Marion spodumene project. But the company's share price has fallen more than 40% since its peak in September 2021.

For the upgrading of the above projects, the announcement calculation results show that the lithium concentrate capacity of the Mt Marion spodumene project is expected to increase from 450000 tons / year to 600000 tons / year before April 2022. At the same time, with the second phase of RIM capacity expansion, it is expected to double the existing lithium concentrate production capacity to 900000 tons / year by the end of 2022. The Mt Marion spodumene project is currently one of the largest spodumene producers in the world.

The long-term shortage of lithium salt supply highlights the strategic importance of lithium ore resources. According to Anxin Securities statistics, Ganfeng Lithium has global layout of Australian spodumene, Argentine Salt Lake and Mexican clay projects, while indirectly acquiring 50% stake in Goulamina spodumene mine in Africa, participating in CORE and signing lithium concentrate underwriting agreement, increasing 100% interest in Mariana project and wholly-owned acquisition of Sonora interest.

It is worth noting that according to the annual report disclosed by Ganfeng Lithium Industry on March 31, the company achieved revenue of 11.162 billion yuan in 2021, an increase of 102.07% over the same period last year, and its net profit was 5.228 billion yuan, an increase of 410.26% over the same period last year.

In addition, Ganfeng Lithium Industry recently announced its results in the first two months of this year, of which the net profit after deduction was about 1.8 billion yuan, a year-on-year increase of 10 times. As for the reasons for the performance growth this year, the company said that due to further increases in product prices, sales have increased compared with the same period last year.

According to Ganfeng lithium owner products, more than 70% of the company's revenue comes from lithium salt business, and the profit accounts for 89.5%.

Data show that from the beginning of 2021 to March 2022, the average price of battery-grade lithium carbonate rose from 53000 yuan / ton to 495000 yuan / ton, an increase of 833.9%.

For the late trend of lithium prices, Yan Yan of China Merchants Bank and others analyzed that in the short term, there will be a shortage of lithium salt in 2022, and the price will remain high under strong demand; from 2023 to 2025, with the rapid release of production capacity, prices have fallen in stages, but it is difficult to see a sharp decline in prices from 2019 to 2020.

Dongxing Securities Zhang Tianfeng and others said in a research report on April 1 that considering that the domestic lithium price of 22Q1 has risen to 500000 yuan / ton, the company's lithium salt business will continue to show high year-on-year growth in 2022 under the expectation that overseas long order prices and lithium concentrate prices will follow the increase, and the gross profit margin may maintain a record high level of more than 40%.

As of April 3, a total of 18 institutions had forecast Ganfeng Lithium Industry's performance in 2022 within six months, with the average estimated net profit of 9.255 billion yuan and the maximum estimated value of 13.841 billion yuan, an increase of 164.7 percent over the same period last year.

Zhang Tianfeng and others estimate that the net profit growth rate of Ganfeng Lithium Industry will be 110.82% year-on-year in 2022, a sharp drop from the 410% growth rate in 2021, and the estimated net profit growth rate for the whole year of 2023 will drop to 33.28%.

On the other hand, the abnormal price of lithium materials has been concerned by all parties recently. The Ministry of Industry and Information Technology held two consecutive symposiums a few days ago, bringing together industry associations and relevant responsible persons of key enterprises in the upstream and downstream of the industrial chain, such as lithium resources development, lithium salt production, cathode materials, power batteries, and so on. The meeting demanded that enterprises in the upper and lower reaches of the industrial chain should strengthen the docking of supply and demand, work together to form a long-term and stable strategic cooperation relationship, and jointly guide the rational return of lithium salt prices.

In this regard, a number of industry insiders said that the price of lithium carbonate has calmed down after a two-month surge. With the increase in supply, prices may fall in the second quarter, and the rising market may usher in an inflection point.