Chengtun Mining Group Co.Ltd(600711) (600711)
Holding 70% and expanding 40000 tons of pyrometallurgical high matte project. On the evening of December 2, the company announced that Hongsheng international, a wholly-owned subsidiary of the company, plans to establish Shengmai nickel in Indonesia, Hongsheng international and extension hold 70% and 30% of the project respectively. The total investment of the project is US $350 million. According to the equity proportion of the company, the company’s foreign investment is US $245 million, equivalent to RMB 1566 million. The construction period of the project is 18 months.
The total capacity of nickel resource planning of the company reaches 74000 tons, and Youshan high nickel ice project has been successfully operated and accumulated mature operation experience. In August 2019, the company held 35.75% of the shares and jointly built the first 34000 ton high nickel matte project with Huayou and Qingshan, with a total investment of US $407 million, which was successfully put into operation in September 2020. 1) The project is also located in IWIP Park, which can produce good collaborative management effect; 2) make full use of the existing construction, production and operation experience, optimize the existing smelting process and ensure the smooth operation of the project; 3) After the project is put into operation, the total nickel production capacity of the company will reach 74000 tons and the equity will reach 40200 tons, and the resource control and guarantee capacity will be further enhanced; 4) The cost per ton of high nickel matte is about US $10000. Under the assumption of nickel price of US $16000, the equity volume of 40200 tons is expected to contribute US $240 million, about RMB 1.58 billion.
Nickel intermediate products projects are planned and put into operation in a centralized manner, and the company has successfully seized the first mover advantage in the market. New energy batteries drive the rapid growth of nickel sulfate demand, and the laterite nickel ore smelting project in Indonesia has become a battleground. In September 2020, the company’s first 34000 ton fire process project was successfully put into operation, seizing the first mover profit advantage in the market; In May 2021, Ningbo Liqin’s first wet MHP project was put into operation. In terms of future planning, Huayou 60000 ton Huayue wet process project has been successfully trial produced recently; Gem Co.Ltd(002340) qingmeibang project is planned to be put into operation in early 2022; Huayou 45000 ton Huake pyrometallurgical high matte nickel project is planned to be put into operation in mid-2022. In addition, the 75000 ton ferronickel to high matte project in Qingshan breaks the barrier between ferronickel and nickel sulfate and increases the potential source of nickel sulfate raw materials.
Focus on overseas high-quality lithium battery resources and extend the integrated layout downward. The company focuses on nickel cobalt copper zinc metal, actively develops high-quality energy metal resources at home and abroad, and moderately extends downstream lithium battery raw materials. At present, it has formed a coordinated development situation of copper and cobalt business in the Democratic Republic of the Congo, nickel business in Indonesia and metal smelting and processing business in China. In the next three years, the company’s performance may focus on CCR & CCM copper and cobalt smelting project, kalongwei copper and cobalt resource smelting integration project and Youshan and Shengmai pyrofa high nickel matte projects in Indonesia, and the new material business is beginning to take shape.
Investment suggestion: the company focuses on the nickel cobalt copper resource track in the upstream of new energy and extends downward to the field of new energy processing. The integrated layout of new energy lithium battery materials is getting better and better, and the company’s profitability is expected to continue to grow. We estimate that the net profit attributable to the parent company from 2021 to 2023 will be RMB 1.594 billion, RMB 2.014 billion and RMB 2.349 billion respectively, corresponding to 19.5, 15.4 and 13.2 times of PE and 2.6, 2.2 and 1.9 times of Pb respectively, maintaining the “buy” rating.
Risk warning: nickel price fluctuation risk, joint venture project progress uncertainty risk.
