Source of this article: Time Weekly Author: Liao Wei
Behind the crazy rise in lithium prices, the performance of upstream lithium battery material leaders is booming.
Recently, Ganfeng Lithium and Shengxin Lithium Energy's 2021 report cards have been released. According to the financial report data, Ganfeng Lithium's total revenue reached 11.162 billion yuan last year, an increase of 102% year-on-year, and the net profit attributable to shareholders of listed companies reached 5.228 billion yuan, an increase of 410% year-on-year. Shengxin Lithium Energy's revenue last year was 2.934 billion yuan, a year-on-year growth rate of 63.88%, and the net profit attributable to shareholders of listed companies reached 850 million yuan, an increase of 3030% year-on-year.
"It's not surprising that we're in an industry with a relatively strong cycle." For the strong performance of lithium salt companies last year, a head miner insider told the Times Weekly reporter. Li Liangbin, chairman of Ganfeng Lithium, also said at the beginning of this year that the cyclicality of lithium products is very obvious. "There was 200,000 yuan / ton yesterday, and there may be 40,000 yuan / ton tomorrow."
The data shows that due to the long-term downturn in lithium salt prices before the epidemic, the performance of most lithium salt manufacturers is not good. Shengxin Lithium Neng said in the financial report that "the company's net profit before and after deducting non-recurring gains and losses in the last three fiscal years is negative, and the latest year's audit report shows that there is uncertainty in the company's ability to continue to operate".
For the trend of lithium salt prices this year, an analyst of a domestic commodity market information supplier recently told the Times Weekly reporter, "In the short term, lithium salt prices have reached the top, the price is going up, and the downstream is not buying." However, it will not fall too much, the future is still in a tight balance, the price of battery-grade lithium carbonate will stand at least 400,000 yuan / ton."
Business agency data show that the recent battery-grade lithium carbonate quotation is stable at about 480,000 yuan / ton, compared with the previous month 500,000 yuan / ton price has declined to a certain extent.
There are mines in hand, and the performance is not worrying
As the world's third largest producer of lithium compounds and the world's largest producer of lithium metal, Ganfeng Lithium performed strongly last year.
According to the financial report data, Ganfeng Lithium's net profit attributable to listed companies last year was 5.228 billion yuan, its non-net profit was 2.907 billion yuan, and about 44% of the net profit came from non-recurring gains and losses. In this regard, the marketing department of Ganfeng Lithium told the Times Weekly reporter that "it is mainly the fair value change profit and loss generated by the rise of Pilbara's stock price."
In terms of products, the total revenue of lithium series products in basic chemical materials last year was 8.323 billion yuan, a year-on-year increase of 115%, accounting for 74.57% of the company's total revenue, an increase of about 4.6 percentage points over 2020, and the gross profit margin of the business was 47.76%. The total revenue of lithium battery series products mainly lithium batteries and lithium batteries was 2.022 billion yuan, an increase of 59.49% year-on-year, accounting for 18.12% of the total revenue, down about 4.8 percentage points year-on-year, and the gross profit margin of the business was 11.98%. Other businesses accounted for only 7.3% of total revenue, less than in 2020.
It is reported that although Ganfeng Lithium has more than 40 kinds of lithium compounds and lithium products production capacity, its main products are lithium hydroxide. According to the financial report, Ganfeng Lithium currently provides battery-grade lithium hydroxide products to Tesla, and lithium hydroxide and lithium carbonate products to LG Chem and Umicore.
According to business agency data, lithium salts such as lithium hydroxide and lithium carbonate rose by 310% and 416% respectively last year. Among them, the price increase of lithium carbonate was mainly concentrated in the middle of the third quarter and the end of the fourth quarter, while the price of lithium hydroxide rose by about 80% in the first half of last year, and rose by more than 100% in the third quarter.
However, Ganfeng Lithium's non-net profit margin in the first half of last year was 20.5%, which fell to 19.8% in the third quarter and rose to 36% in the fourth quarter. For the fluctuation of deducting non-net profit margin, the marketing department of Ganfeng Lithium told the Times Weekly reporter that "the month-on-month data has been improving." Downstream customers' demand for lithium products has grown strongly, the production and sales of lithium products have increased, the average sales price has risen, new projects in the lithium battery sector have been put into production, and production capacity has been gradually released."
Coincidentally, the current revenue pillar of Shengxin Lithium Energy also comes from lithium products. According to the financial report data, in 2021, Shengxin Lithium Energy's revenue last year was about 2.934 billion yuan, an increase of 63.88% year-on-year. In terms of product structure, Shengxin Lithium Energy Lithium Product Revenue reached 2.785 billion yuan, an increase of about 300% year-on-year, accounting for about 95% of the total revenue of the year, and the gross profit margin of the business reached 47.78%; the revenue of the rare earth business was 139 million yuan, accounting for 4.7% of the total revenue, and the gross profit margin of the business was 23.49%.
It is worth mentioning that Shengxin Lithium Energy, formerly known as Warwick Shares, is mainly engaged in wood-based panel and wooden processing. In 2016, after the company's controlling shareholder was changed to Shengtun Group, it officially entered the new energy track. According to the 2020 financial report, Shengxin Lithium Energy's revenue from wood-based panels and forest trees still accounted for 49.15% of revenue.
Due to the late investment, the current resource self-sufficiency rate of Shengxin Lithium Energy is not high. Guojin Securities Research Report pointed out that with the production of mines, it is expected that the company's resource self-sufficiency rate in 22 years is 20%, and it is expected to reach more than 70% in 25 years.
Accelerate production expansion and layout upstream
Looking forward to the future, in the case of strong downstream demand, whether it is Shengxin Lithium Energy or Ganfeng Lithium, they are actively expanding production and expanding and laying out upstream lithium resources.
According to the data, the current Shengxin Lithium Energy has four major lithium product production bases, which are located in Deyang, Sichuan, Shehong, Sichuan, and Central Sulawesi, Indonesia, with an annual production capacity of 130,000 tons of lithium salts (of which 60,000 tons are expected to be put into production in 2023), and the annual production capacity of lithium metal is 10 million tons (4 million tons have been built).
To secure the supply of raw materials, Shengxin Lithium has acquired a 51% stake in Max Mind Hong Kong, a subsidiary of Sun Company, which owns mining warrants for a total of 40 rare metal blocks in the Sabi star lithium tantalum mine project in Zimbabwe. At the same time, it also acquired a 100% stake in the Argentine company SESA, which has the right to operate the UT consortium and operates the Argentine SDLA project, which has an annual production capacity of 2,500 tons of lithium carbonate equivalent.
Ganfeng Lithium currently has an effective production capacity of lithium carbonate, lithium hydroxide and lithium metal of 28,000 tons/ year, 70,000 tons / year and 2150 tons / year, respectively. In 2022, Ganfeng Lithium is planning and constructing five lithium product projects. The project under construction is the Cauchari-Olaroz Lithium Salt Lake Project in Argentina, which is scheduled to be commissioned in 2022, with a production capacity of 40,000 tons of lithium carbonate in the first phase and a production capacity of not less than 20,000 tons of lithium carbonate equivalent in the second phase. Ganfeng Lithium expects to form a total annual output of 300,000 tons of lithium carbonate equivalent lithium product supply capacity in 2025.
In addition to increasing the expansion of upstream production capacity, Ganfeng Lithium also plans to make greater achievements in the field of power batteries, which said in its annual report that it "strives to rank among the first echelon of the global lithium battery industry." However, Ganfeng Lithium's lithium battery series revenue in 2021 accounts for less than 20% of total revenue.
For how to achieve the goal in the field of power batteries, the marketing department of Ganfeng Lithium Industry said, "It is mainly carried out in three parts. The first is to further exert the synergy effect between the plates, including the synergy between the lithium battery plate and raw materials and recycling; the second is to further increase investment in research and development, improve product quality, and carry out a new generation of solid-state lithium battery technology research and development and industrialization construction; the third is to increase production capacity and build new production bases in Xinyu, Huizhou, Chongqing and other places."
Since the entire lithium battery industry is currently undergoing large-scale expansion and expansion, it has also led to a great increase in the demand for corresponding employees. Recently, some people in the lithium battery industry told the Times Weekly reporter that "the demand for front-line technicians, engineers and high-end talents has a large gap, and the salary increase is also more obvious."
Ganfeng Lithium mentioned in the annual report that combined with the salary level of the same industry and the region, the company's salary level is in line with the external market. At the same time, through performance appraisal, stimulate the enthusiasm of employees. According to the financial report, Ganfeng Lithium has 1163 employees in 2020, and the salary payable to employees is 79.05 million yuan, which is 67,900 yuan per capita, while the number of employees in 2021 is 1216 people, and the salary payable to employees is about 110.1 million yuan, which is about 90,500 yuan per capita, an increase of 22,600 yuan over 2020, an increase of about 33%.
"At present, the company's domestic and overseas business has talent needs, including technical, functional and other positions. However, the demand gap is not large, but it is increased step by step according to demand. Ganfeng Lithium Marketing Department also told the Times Weekly reporter. According to the Times Weekly reporter, due to the rapid development of the industry, the lithium battery industry has a relatively large demand for talents, which also makes the salary increase of power battery engineers and other positions even reach 100%.