\u3000\u3 Jointo Energy Investment Co.Ltd.Hebei(000600) 295 Inner Mongolia Eerduosi Resources Co.Ltd(600295) )
Events
In 2021, the company achieved a total operating revenue of 36.4 billion yuan, an increase of 57.34% over the same period of last year; The total profit was 9.6 billion yuan, an increase of 280.20% over the same period last year; the net profit attributable to shareholders of listed companies was 6.1 billion yuan, an increase of 299.73% over the same period last year; the net profit attributable to shareholders of listed companies after deducting non recurring profits and losses was 6 billion yuan, an increase of 316.04% over the same period last year
Brief comment
The rise in product prices and the acquisition of coal mine assets have brought about a significant improvement in performance. Under the pressure of double control of energy consumption last year, ferrosilicon and PVC increased. In addition, the company acquired 38% equity of Yongmei mining, and the investment income increased significantly.
The resumption of production is imminent, and the increase of hot metal production has brought about the increase of ferrosilicon demand. Last year, Q4 steel enterprises reduced production on a large scale to achieve the annual horizontal control target. The Q1 winter Paralympic Games continued to affect the output, and the molten iron has been discharged at a low level. It is estimated that after the heating season, the hot metal will rise from 2.1-2.2 million tons to 2.4-2.5 million tons, and the demand will increase by more than 10%.
Under the conflict between Russia and Ukraine, there is a great potential for East Asian countries to transfer orders to China, resulting in marginal growth of export demand. The annual production capacity of ferrosilicon in the world is about 11.1 million tons, and that in China is about 8 million tons. It is the largest producer of ferrosilicon in the world. In 2021, China’s annual output of ferrosilicon is 5.86 million tons and its export is 550000 tons. The total exports of East Asian countries to South Korea were 390000 tons, mainly from Russia to Japan in November last year. During the war and conflict, Japan and South Korea are more likely to seek more secure and stable suppliers. If half of the exports are undertaken by China, the demand for ferrosilicon will further increase by about 5%.
The company’s business can be divided into power plants + ferrosilicon plants and high-quality associated coal mines, so as to improve the profit safety cushion. Recently, the downstream electricity price has generally risen, and the electricity price of ferrosilicon, PVC and other industries has generally increased by about 0.2 yuan. The company’s own power generation is not affected at all. We can understand the company’s own power plant as a thermal power plant that only sells power to high energy consuming industries. The annual power generation corresponds to the power demand of ferrosilicon, calcium carbide and PVC, which is about 850000 kwh. Due to the sale to high energy consuming enterprises, the excess profit is calculated by 0.2, totaling 1.7 billion, which will provide a strong safety cushion. In addition, the company’s equity mine is 500 + 1200 50% = 11 million tons, which also has high safety guarantee
The company’s profitable business and safety of coal power plants. Ferrosilicon business has great flexibility under the resonance growth of China’s demand and export demand. It is estimated that the company’s performance from 2021 to 2023 will be 6.1 billion, 7.9 billion and 8.4 billion, and the corresponding PE will be 6.7 times, 5.1 times and 4.8 times respectively. Give “overweight” rating.
Risk tip: the resumption of steel production is less than expected.
