After hitting bottom in Q1 profit growth, Qinghai Yanhu Industry Co.,Ltd. (000792.SZ) has begun releasing quarterly performance gains.
On the morning of October 14, Qinghai Yanhu Industry's stock price surged over 8% at one point.
The previous evening, the company released its earnings forecast, stating that net profit attributable to shareholders for the first three quarters is expected to reach 4.3 billion to 4.8 billion yuan.
Specifically, third-quarter profit is projected at 1.8 billion to 2.2 billion yuan, representing sequential growth from Q2 and a year-over-year increase of 93.77% to 136.83%.
Notably, considering the company's potential potash fertilizer sales growth in Q4, the cyclical position of potash and lithium products, and the recently commissioned 40,000 tons/year additional lithium salt capacity, Qinghai Yanhu Industry's profit growth appears virtually certain.
Various sell-side institutions have recently raised their full-year earnings forecasts for Qinghai Yanhu Industry.
Wind data shows that before the earnings forecast release, most sell-side analysts maintained 2025 profit expectations between 5.2 billion and 5.8 billion yuan; after the forecast publication, sell-side profit expectations were generally raised to above 6 billion yuan.
Going forward, Qinghai Yanhu Industry's Q4 earnings magnitude will become the primary factor determining full-year profit growth.
**Potash Fertilizer Drives Success**
During 2023 and 2024, as industry prosperity declined, Qinghai Yanhu Industry's profit growth had declined for eight consecutive quarters until hitting bottom and rebounding in Q1 this year.
A key driving factor has been the sustained price increases of potash fertilizer, currently the company's largest main product.
"Due to closures and maintenance at multiple potash mines in Russia and Belarus leading to global potassium chloride supply contraction, combined with seasonal demand growth in major agricultural regions like Southeast Asia and Latin America, global potassium chloride supply-demand continues tightening, causing potassium chloride prices to rise continuously since late 2024," according to research reports.
Wind data shows that the ex-factory price of Qinghai Salt Lake potassium chloride (60% powder) was 2,550 yuan/ton at the end of 2024, rising to 3,200 yuan/ton by mid-July this year, and has since maintained around 3,100 yuan/ton.
In contrast, Qinghai Yanhu Industry's cost structure has remained stable, with most of the potash price increases translating into profit increments for the listed company, becoming an important factor driving this year's earnings improvement.
Comparatively, while lithium salt prices fell significantly this year, with battery-grade lithium carbonate market average price once dropping below 60,000 yuan/ton in June, Qinghai Yanhu Industry's outstanding cost advantages and the fact that lithium salt revenue now accounts for less than 20% of total revenue means the lithium salt business hasn't significantly impacted overall company performance.
"During the reporting period, potassium chloride prices increased compared to the same period last year, driving profit growth in this business segment; lithium carbonate market prices underwent downward adjustment, but overall, the company's performance achieved growth compared to the same period last year," Qinghai Yanhu Industry noted in its earnings forecast.
Against this backdrop, the company's profits have risen quarter by quarter this year. Related data shows that in Q1-Q3 this year, Qinghai Yanhu Industry's net profit attributable to shareholders was 1.145 billion yuan, 1.375 billion yuan, and 1.8-2.2 billion yuan respectively.
Entering Q4, considering potash fertilizer price-volume dynamics, this positive earnings trend is expected to continue.
"According to Baiinfo, the 2025 imported potash fertilizer contract price is CFR $346/ton. We estimate this price corresponds to approximately 3,000 yuan/ton including tax in the domestic market, which may provide effective support for domestic potash fertilizer prices," CICC pointed out.
As of October 14, spot prices and indices for potassium chloride tracked by market institutions like Longzhong Information and JLC remain at year-to-date highs with no significant decline.
Additionally, comparing historical data, Qinghai Yanhu Industry's Q4 potash fertilizer sales volume may have room for further growth.
Currently, the company has 5 million tons/year potassium chloride capacity, with annual potash sales generally exceeding 4.5 million tons over the past five years, while this year's first three quarters sales were only 2.86 million tons.
The above institutions also expect Q4 company potash sales volume "may range between 1.64-2.14 million tons," representing substantial growth from Q3's 1.08 million tons.
Based on this volume-price logic, CICC raised its full-year earnings forecast for Qinghai Yanhu Industry by 12% to 6.4 billion yuan.
**40,000 Tons New Lithium Salt Capacity**
At the end of September this year, Qinghai Yanhu Industry announced the commissioning of its 40,000 tons/year integrated basic lithium salt project.
"The project has been substantially completed, with key equipment adsorption lithium extraction devices producing qualified liquid during testing, nanofiltration reverse osmosis systems completing membrane installation and water commissioning, lithium precipitation and utilities completing core equipment individual testing, formally entering the feeding trial phase and producing qualified battery-grade lithium carbonate products," Qinghai Yanhu Industry noted at the time.
The company plans to produce 3,000 tons of lithium carbonate from this new capacity this year and strives to "achieve further production breakthroughs."
Compared to the company's potential annual lithium carbonate output of 40,000 tons, this incremental volume won't have particularly obvious short-term performance impact, but could become an important earnings driver for the company in 2026.
First, unlike the company's existing 40,000-ton capacity at controlled subsidiary Blue Tech Lithium, the new capacity is entirely self-invested and constructed by Qinghai Yanhu Industry, with the listed company holding 100% equity.
Reflected in financial statements, when calculating profits, there's no need to deduct minority shareholder interests, with all profits from the new capacity fully attributed to the listed company.
Combined with Blue Tech Lithium's equity structure, after the newly commissioned 40,000-ton project reaches full production, Qinghai Yanhu Industry's lithium salt equity capacity won't increase by 100%, but around 200%.
By then, the listed company's lithium carbonate and potassium chloride revenue structure of "20-80 distribution" may undergo significant changes again. Profitability need not be overly concerning - it's merely a question of earning more or less.
Second, although lithium salt prices fluctuated in Q3 this year, with battery-grade lithium carbonate market average price rising from 60,000 yuan/ton to 85,000 yuan/ton, the current price of just over 73,000 yuan/ton remains at relatively low cyclical levels, with upward bias.
Historical data shows that even excluding the 2020-2022 super rally cycle, lithium carbonate's historical fluctuation range can still reach 40,000-170,000 yuan/ton.
Subsequently, once industry supply-demand fundamentals substantially improve, lithium salt prices will gain significant upward elasticity, substantially increasing profit margins for salt lake lithium extraction companies.
Looking back, the lithium salt industry may have passed its most difficult phase, with lithium company stock prices showing very clear rebounds in the second half.
According to statistics, since July this year, the 19 sample companies in Wind's lithium mining sector have averaged 31% gains, with individual stocks involving hot concepts like solid-state batteries and copper mining rising over 50%.
During this industry "bottoming" process, the competitive advantages and safety margins brought by salt lake companies' low costs have also received full market validation.
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