Home » Lithium salt prices “reversed”, Shengxin Lithium’s annual net profit hit a new high and has completed the transition to new energy materials_Company_Concentrate_Shengxin

Lithium salt prices “reversed”, Shengxin Lithium’s annual net profit hit a new high and has completed the transition to new energy materials_Company_Concentrate_Shengxin

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Original title: Lithium salt prices “reversed”, Shengxin Lithium’s annual net profit hit a new high and has completed the transition to new energy materials

Every reporter: An Yufei Every editor: Liang Xiao

The defeat is also the lithium salt, and the success is also the lithium salt. Lithium salt prices will continue to grow in 2021, and Shengxin Lithium’s performance in 2021 will also be completely different from 2020.

On the evening of January 25, Shengxin Lithium Energy (002240, SZ) released the 2021 annual performance forecast, which is expected to achieve a net profit of 830 million to 920 million yuan, an increase of 2954.31% to 3285.5% over the same period in 2020; it is expected to achieve non-net profit after deduction 848 million to 938 million yuan, a year-on-year increase of 472.96% to 512.55%.

If counted from the period of “Weihua Shares”, the above performance data is already the “best annual performance” since the company went public in 2008. According to Shengxin Lithium Energy, the performance growth benefited from “the rapid development of the new energy industry, the strong growth of downstream customers’ demand for lithium salts, and the company’s lithium salt production, sales and sales prices have increased significantly compared with the same period last year.”

In 2020, Shengxin Lithium Energy will deduct a non-net profit loss of 227 million yuan. According to the staff of the company’s securities department in May last year, the company’s poor performance in 2020 was affected by the decline in lithium salt prices, and the decline in lithium salt raw material prices did not catch up with the decline in lithium salt prices, and the company’s profit margins were squeezed.

At the same time, Shengxin Lithium Energy has also completed the transformation to new energy materials in 2021. In 2020, the wood-based panel and forestry business also accounted for 49.15% of the company’s total revenue. By the first half of 2021, the proportion of revenue from related businesses has dropped significantly to 0.27%.

Lithium salt prices “reversed” strongly

It is understood that lithium salt is the general term for lithium compounds such as lithium carbonate, lithium chloride, and lithium hydroxide in the industry.

According to Shengxin Lithium’s 2020 financial report, the decline in the company’s performance for the year was affected by the downturn in the lithium salt product market. In the first half of 2020, the average selling price of lithium salt and its by-products was 48,048.38 yuan/ton. In the second half of 2020, the average selling price dropped to 40,042.29 yuan/ton, a drop of 16.66%.

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However, after entering 2021, the prices of various lithium salt products have shown strong growth. Taking lithium carbonate as an example, Wind data shows that on January 4, 2021, the average market price of domestic lithium carbonate was 53,000 yuan / ton, and on December 31, 2021, this price rose to 275,000 yuan / ton. During the year, it increased by more than 4 times, as high as 418.87%.

Then look at lithium hydroxide. According to Wind data, on January 4, 2021, the average market price of domestic lithium hydroxide was 50,000 yuan/ton. On December 31, 2021, its price had risen to 222,500 yuan/ton, an increase of 345%.

From the above data, we can see how “crazy” the price increase of lithium salt has been in the past year. The main products of Shengxin Lithium Energy’s lithium salt business are lithium hydroxide and lithium carbonate. The company’s business model includes lithium ore mining and lithium salt processing. The main raw material lithium concentrate is not only purchased from overseas lithium ore resource enterprises such as Yinhe Lithium Industry and AVZ Mining, but also part of it is produced by Shengxin Lithium Energy’s own mines.

The staff of Shengxin Lithium Energy Securities Department said that the company’s current lithium concentrate capacity is 75,000 tons, corresponding to 10,000 tons of lithium salt, accounting for 25% of the company’s 40,000 tons of lithium salt production capacity.

Since the self-produced raw materials are only enough to fill a quarter of the company’s production capacity, Shengxin Lithium still relies on outsourcing a large proportion of its lithium concentrate. Whether the company can obtain corresponding profits when the price of lithium salt soars also depends on the price increase of lithium concentrate: if the price of lithium concentrate increases more than that of lithium salt, the company may not be able to obtain corresponding profits due to the high proportion of raw material costs. If the price increase of lithium concentrate is lower than that of lithium salt, then the company will benefit greatly from the increase of lithium salt price.

Judging from the 2021 semi-annual report of Shengxin Lithium Energy, the price increase of lithium concentrate is not as high as that of lithium salt. In the first half of 2021, Shengxin Lithium Energy’s lithium salt business achieved a revenue of 992 million yuan, a year-on-year increase of 484.2%, and an operating cost of 632 million yuan, a year-on-year increase of 244.33%.

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The difference between the price increase of lithium concentrate and lithium salt has also greatly improved the gross profit margin of Shengxin Lithium Energy. In the first half of 2021, the gross profit margin of the company’s lithium salt business was 36.24%, an increase of 44.41 percentage points over the same period of the previous year (the same period last year was negative).

It is worth mentioning that the fluctuation of raw material prices is not as good as that of lithium salt products, which is actually one of the characteristics of the industry. As early as after the release of the company’s 2020 financial report, the staff of Shengxin Lithium Energy Securities Department told reporters that although the price of raw materials for lithium salts in 2020 has dropped, the decline is lower than that of lithium salts, which is also a factor that affects the company’s performance for the year. reason.

“Sell” wood-based panels, increase the number of own mines

The staff of Shengxin Lithium Energy said that at present, the company’s wood-based panel business has been basically stripped away, and only a very small part is left, and it will be stripped off when there are relevant plans in the future.

Earlier, Shengxin Lithium Energy was the integration of forestry and board, and went public in 2008. At that time, its abbreviation was “Weihua Shares”. It was not until 2016 that it increased its capital and controlled Jiangxi Wanhong High-tech Materials Co., Ltd. and Sichuan Zhiyuan Lithium Industry Co., Ltd. by raising funds through non-public issuance of shares, and it began to enter the lithium salt track.

In recent years, Shengxin Lithium Energy has been stripping off the original wood-based panel business and adding lithium materials. On September 29, 2020, Shengxin Lithium Energy completed the transfer procedures for the sale of 55% stakes in Hebei Weilibang, Hubei Weilibang, Guangdong Weilibang, and Liaoning Weilibang, at a transaction price of nearly 921 million yuan. The “Wilibang” companies whose controlling rights were sold are the main carriers of Shengxin Lithium Energy’s wood-based panel business.

In April 2021, Shengxin Lithium Energy sold the remaining 45% stake in Guangdong Weilibang. According to the announcement at the time, the proceeds from the sale of the shares will be used for the construction of lithium industry chain projects and to supplement the liquidity of the lithium industry chain.

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“One reduction and one increase” is also very effective. In the 2020 financial report, the wood-based panel and forestry business accounted for 49.15% of the company’s total revenue, but in the first half of 2021, this proportion has plummeted to 0.27%, which is almost negligible.

The field of overweight self-owned mines is in sharp contrast to the “slim down” wood-based panel business. At present, in terms of its own lithium mines, Shengxin Lithium Energy Sun Company Oinuo Mining owns the mining rights of Yelonggou spodumene mine in Jinchuan County, Sichuan Province and the detailed exploration rights of Yanghekou Lithium Polymetallic Mine, of which Yelonggou Lihui The quarry has proven lithium oxide resources of 111,500 tons.

In addition, the company also acquired a 51% stake in Max Mind. Its wholly-owned subsidiary company owns the mining licenses for a total of 40 rare metal ore blocks in the Sabi Star Lithium-Tantalum Mine Project in Zimbabwe, of which the main mineral of 5 mining rights is lithium oxide. The resource is 88,500 tons, the associated lithium oxide resource is 5,200 tons, and the other 35 mining rights are in the pre-exploration preparation stage.

With the gradual commissioning of the mine, Shengxin Lithium’s resource self-sufficiency rate is expected to further increase. According to the research report of Sinolink Securities, the company’s resource self-sufficiency rate is expected to reach more than 70% by 2025. The staff of Shengxin Lithium Energy Securities Department also said that the company is also optimistic about this expectation.

However, the mining of lithium resources also faces the problem of “the more difficult it is to mine at the back”. With the gradual reduction of high-grade and easy-to-minable lithium resources, will the mining cost of the subsequent Shengxin Lithium Energy lithium resources be further increased, which will bring corresponding cost problems while the resource self-sufficiency rate increases?

In this regard, the relevant staff of the company said that with the passage of time, the technology will become more and more mature, and the overall cost of lithium resource mining should be within a controllable range.

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