Chengtun Mining Group Co.Ltd(600711) (600711)
1、 Event overview
As of December 28, 2021, the average prices of cathode copper, electrolytic nickel and MB cobalt in 2021 have risen sharply year-on-year, reaching 68518.04 yuan / ton, 139447.5 yuan / ton and 23.39 dollars / pound respectively, with year-on-year increases of 40.11%, 25.44% and 51.69% respectively. In 2020, the average prices of cathode copper, electrolytic nickel and MB cobalt are 48903.59 yuan / ton, 111167.9 yuan / ton and 15.42 US dollars / pound respectively.
2、 Analysis and judgment
Since 2016, the company has gradually become a Chinese high-quality mining enterprise focusing on nickel, copper and cobalt by controlling resources and expanding materials around the new energy industry chain.
The company’s copper, cobalt and nickel projects were laid out in 2016. The existing layout is: ① Congo copper and cobalt, CCR (51% equity, copper cobalt smelting) + CCM (100% equity, copper cobalt smelting) + kalonway (95% equity, copper cobalt mine); ② China cobalt deep processing + zinc smelting, kelixin (acquired 100% equity in 2018, cobalt deep processing), Sihuan Zinc Germanium (acquired in 2019, with 100% equity and zinc smelting); ③ by the end of June 2021, the company has the capacity of 40000 tons of copper, 8000 tons of cobalt material, 40000 tons of nickel material and 250000 tons of zinc. With CCM (30000 tons of copper, 5800 tons of cobalt) and kalonway With the commissioning of the project (30000 tons of copper and 3556.4 tons of cobalt) and the expansion of the production of tetracyclic Zinc Germanium, the company will form an annual production capacity of 120000 tons of copper, 45000 tons of nickel, 16000 tons of cobalt and 300000 tons of zinc in the next three years.
The company has entered a period of harvest and rapid growth since 2021.
The company began to lay out the new energy industry chain in 2016. The main reason for the sharp fluctuation of performance in 2017-2019 is the fluctuation of cobalt price. In 2017-2019, the net profit attributable to the parent company changed by + 420, – 120 and – 190 million yuan year-on-year respectively, and the gross profit of cobalt material business changed by + 710, – 150 and – 560 million yuan year-on-year respectively. Split the performance in the first half of 2021. Youshan nickel, CCR, Sihuan Zinc Germanium and kelixin contributed 260 million yuan, 289 million yuan, 99.34 million yuan and 44.69 million yuan to the company’s net profit attributable to the parent respectively. In 2021h1, Youshan nickel and CCR accounted for 76.92% of the company’s net profit attributable to the parent, and the company’s new energy layout gradually entered the harvest period. In the future, with the commissioning of CCM and kalonway projects, the company’s profits will increase significantly.
3、 Investment advice
With the rapid increase of the company’s production capacity and the superposition of high metal prices, the company’s profits may enter a period of rapid growth. We assume that ① copper price is 60000 yuan / ton, nickel price is 110000 yuan / ton, MB cobalt price is 20 dollars / pound, zinc price is 17000 yuan / ton, ② CCM project starts to release output in 22 years, ③ zinc smelting capacity is increased by 20000 tons / year year by year. It is expected that the company will realize net profit attributable to parent company of 1.48 billion yuan, 1.98 billion yuan and 2.6 billion yuan respectively from 2021 to 2023, EPS is 0.54 yuan, 0.72 yuan and 0.95 yuan, and PE corresponding to closing price on December 29 is 20 times 15 times and 11 times, covering for the first time, and giving the company a “recommended” rating.
4、 Risk tips:
The prices of copper, cobalt, nickel and other metals fell sharply; The commissioning progress of the project is less than expected; Exchange rate fluctuation risk.
