Power investment energy ( Huolinhe Opencut Coal Industry Corporation Limited Of Inner Mongolia(002128) )
Event: on March 14, 2022, the company announced that the production and operation from January to February 2022 had a good start and achieved good business results. According to the preliminary accounting of the company, from January to February 2022, the company achieved an operating revenue of about 4.737 billion yuan, a year-on-year increase of about 25.79%; The net profit attributable to shareholders of listed companies was about 1.026 billion yuan, with a year-on-year increase of about 80.19%.
The rise of coal and aluminum prices promoted the sharp rise of performance. Most of the company’s coal is sold by the long-term association. From January to February 2022, the long-term association price is subject to the 2021 long-term association price, which is significantly higher than that in the same period last year. According to wind data, the average price of aluminum in the Yangtze nonferrous metals market from January to February 2022 increased by 40% compared with the same period last year. Affected by this, the net profit attributable to the parent company increased by 80.19% to about 1.026 billion yuan from January to February 2022.
Continuous investment in new energy power generation is expected to become a new profit growth point in the future. Since the company began to invest in new energy power generation business in 2014, the new energy territory of the company has been expanding. On March 11, 2022, the company announced that it plans to build three new energy projects with a total installed capacity of 1500MW (equity installed capacity of 960MW), Among them, the installed capacity of wind power equity is 910mw (100% equity of 400MW wind power project in Alxa base of Shanghai Miao Shandong UHV transmission channel and 51% equity of 1000MW wind power transmission project in Tongliao), and the installed capacity of photovoltaic equity is 50MW (50% equity of Jinzhong Yuci roof photovoltaic 100MW project company). The company’s new energy installed capacity continues to expand. In the future, after grid connected power generation, the new energy business is expected to become a new profit growth point of the company. At the same time, the company is gradually transforming from a traditional energy supplier to a comprehensive energy supplier
The main businesses of coal and electrolytic aluminum are expected to provide stable cash flow to support the development of the company’s new energy business. The company’s subordinate mines have a production capacity of 46 million tons / year, all of which are open-pit mining, and the production cost has significant advantages in the current A-share power coal company. In 2022, the benchmark price of Qinhuangdao q5500 long-term association is expected to increase from 535 yuan / ton to 675 yuan / ton, an increase of 26%. The company’s long-term association accounts for a relatively high proportion. Although the increase cannot be exactly the same, the price center is expected to increase steadily. In terms of electrolytic aluminum, Huo meihongjun (51% equity) of the company has an electrolytic aluminum equity production capacity of 860000 tons / year (corresponding to the company’s equity production capacity of 438600 tons / year), has its own power plant, and its profitability is leading in the industry. Electrolytic aluminum production capacity is constrained by the ceiling of production capacity, and it is difficult to increase the supply. Under the background of steady growth, China’s demand is gradually rising, which is conducive to the rising price of electrolytic aluminum. It is expected that the profitability of the company’s electrolytic aluminum business is expected to improve. In the future, the stable cash flow generated by the company’s coal and electrolytic aluminum business will continue to be invested in the construction of new energy power stations.
Investment suggestion: adjust the profit forecast according to the performance forecast and the recent operation of coal and electrolytic aluminum market. It is expected that the net profit attributable to the shareholders of the parent company is expected to be 3.56 billion yuan / 4.916 billion yuan / 5.315 billion yuan from 2021 to 2023, and the corresponding PE multiples are 8 times, 6 times and 6 times respectively (based on the share price on March 14, 2022). Considering the company’s active transformation to new energy in recent years, it is expected to obtain a valuation higher than that of pure thermal coal business. Therefore, we believe that the company’s valuation is expected to rebound and maintain the “recommended” rating.
Risk tips: 1) the change of regional market demand may lead to the decline of coal price; 2) The profit of thermal power may decline due to the liberalization of the power market and the risk of increased cost; 3) There are many new energy projects under construction, with the risk of policy change; 4) Electrolytic aluminum prices fell sharply.
