Yahua Group(SZ:002497) Changjiang Securities·2024-09-11 01:39Investment Rating - The investment rating for the company is "Buy" and is maintained [6]. Core Insights - The company reported a significant decline in net profit for the first half of 2024, with a year-on-year decrease of 89.25%, resulting in a net profit of 1.02 billion yuan. The non-recurring net profit was 0.75 billion yuan, down 91.77% year-on-year. However, in Q2 2024, the company saw a recovery with a net profit of 0.87 billion yuan, a year-on-year decrease of 75.61% but a quarter-on-quarter increase of 484.39% [3][4]. - The lithium prices have dropped significantly, putting pressure on the company's profitability. In H1 2024, the gross margin was 14.32%, down 8.5 percentage points year-on-year, and the net margin was 0.77%, down 15.3 percentage points year-on-year. The lithium salt business generated revenue of 2.393 billion yuan, a decrease of 47% year-on-year, accounting for 61% of total revenue [3][4]. - The company has seen an increase in lithium salt production and sales, with production up 35% and sales up 114% year-on-year in H1 2024. The civil explosives business also performed well, generating revenue of 1.413 billion yuan, down 12% year-on-year, but with a gross profit of 503 million yuan, up 32% year-on-year [3][4]. Financial Performance Summary - In Q2 2024, the company achieved a gross margin of 18.82%, up 9.57 percentage points quarter-on-quarter, and a net margin of 1.13%, up 0.76 percentage points quarter-on-quarter. The average price of battery-grade lithium hydroxide was 95,300 yuan per ton, up 7% quarter-on-quarter, while battery-grade lithium carbonate was priced at 105,900 yuan per ton, up 4% quarter-on-quarter [4]. - The company has been expanding its smelting capacity, with a current lithium salt production capacity of 73,000 tons per year, and plans to increase this to 170,000 tons with ongoing projects. The company holds a 37.25% stake in the Lijiagou lithium mine, which is expected to produce 180,000 to 200,000 tons of lithium concentrate annually once fully operational [4][3]. - Looking ahead, the company anticipates improved profitability as lithium prices stabilize and high-cost lithium ore inventory is gradually consumed. The current valuation is considered to be at a relatively low level, indicating increasing investment attractiveness [4].