\u3000\u3 Jointo Energy Investment Co.Ltd.Hebei(000600) 295 Inner Mongolia Eerduosi Resources Co.Ltd(600295) )
Events
The company released the performance express of 2021 on the evening of March 4. It is expected to achieve a revenue of 36.411 billion yuan in 2021, a year-on-year increase of 57.34%; The net profit attributable to the parent company was 6.108 billion yuan, a year-on-year increase of 299.73%; The net profit deducted from non parent company was RMB 6.056 billion, with a year-on-year increase of 316.04%; EPS was 4.28 yuan, a year-on-year increase of 300%.
Commentary
Benefiting from the rise in product prices, Q4 performance slightly exceeded expectations. In 21 years, the net profit attributable to the parent company in q1-q3 was 3.712 billion yuan, and the net profit attributable to the parent company in Q4 was 2.396 billion yuan, an increase of 11.86% month on month. The company’s performance in 21 years mainly benefited from the sharp year-on-year rise in the prices of core products such as ferrosilicon and PVC. Among them, the average price of ferrosilicon (75 silicon, Inner Mongolia) in 21 years was 9623 yuan / ton, up 67% year-on-year; The average price of PVC was 9171 yuan / ton, up 38% year-on-year. At the same time, after the company acquired 25% equity of Yongmei mining, an associated enterprise, the investment income increased and the overall profitability increased.
Pay attention to the potential marginal increment of demand brought by ferrosilicon transfer in Russia. As one of the most important exporting countries of ferrosilicon in the world, Russia’s ferrosilicon export volume in 21 years is about 560000 tons, second only to China, followed by Ukraine, with exports concentrated in East Asia, Japan and South Korea. According to Mysteel statistics, the monthly demand for ferrosilicon in Japan and South Korea is about 55000 tons, half of which comes from Russia. With the escalation of the conflict between Russia and Ukraine, judging this part of demand or transferring orders to manufacturers in China, Malaysia and other places, considering the small capacity scale in Malaysia, Chinese ferrosilicon enterprises are expected to benefit. Considering that China’s average monthly output is 48 Tianma Microelectronics Co.Ltd(000050) 0000 tons, or the demand increment of about 4% per month, the impact is great.
Ferrosilicon price increase brings great performance elasticity. The company has an annual production capacity of 1.6 million tons of ferrosilicon, with ferrosilicon production and sales accounting for 30%, ranking first in China. The cost of electricity accounts for over 60% of the cost of ferrosilicon, and the cost advantage of having its own power plant is prominent. At the same time, it accounts for a relatively small proportion in the cost of steel, and the downstream can withstand the price rise. The company’s own coal supply, and self owned power plants have significant advantages in operating cost. It is estimated that every 100 yuan increase in the price of ferrosilicon products corresponds to a profit of 106 million yuan, with great performance flexibility.
Profit forecast & investment suggestions
According to the 21-year performance express, the profit forecast is slightly raised. It is estimated that the net profit attributable to the parent company in 21-23 years will be 6.107 billion yuan, 6.198 billion yuan and 6.295 billion yuan respectively, the corresponding EPS will be 4.28 yuan, 4.34 yuan and 4.41 yuan respectively, and the corresponding PE will be 5 times, 5 times and 5 times respectively, maintaining the “buy” rating.
Risk tips
Ferrosilicon’s capacity removal policy did not meet expectations, resulting in sharp price fluctuations; The pledge rate of major shareholders is high.
