\u3000\u3 China Vanke Co.Ltd(000002) 182 Nanjing Yunhai Special Metals Co.Ltd(002182) )
Performance summary: in 2021, the company achieved operating revenue of 8.12 billion yuan (+ 36.5%), net profit attributable to parent company of 493 million yuan (+ 102%), corresponding EPS of 0.76 yuan, net profit attributable to parent company of 420 million yuan (+ 83.8%) after deduction of non profits. The net profit attributable to the parent company in 2021q4 was RMB 229 million, an increase of 89% month on month. The dividend ratio is 13.1% and the dividend rate is 0.5%;
Both volume and price increased to boost performance: in 2021, with the mitigation of epidemic factors, the compensatory release of demand and the superposition of industrial policy support, the terminal industries such as automobile and consumer electronics stabilized and recovered, driving the demand for magnesium aluminum alloy and related products. On the cost side, the price of ferrosilicon and coal, the raw materials of magnesium, increased, and the impact of environmental protection and production restriction was superimposed. The annual average price of magnesium reached 25244 yuan / ton, an increase of 86% year-on-year. During the reporting period, the increase in sales volume of main products (a year-on-year increase of 19.6%) and the rise in prices led to a significant increase in operating revenue, including 2.36 billion yuan of magnesium alloy products (+ 35.4%), 700 million yuan of magnesium alloy deep processing (+ 47.1%), 3.14 billion yuan of aluminum alloy (+ 23.8%) and 880 million yuan of aluminum alloy deep processing (+ 70.5%). In terms of the profitability of subdivided products, it is precisely because the price of upstream magnesium ingots rises too fast, while the price rise of downstream end products lags behind, resulting in the phased compression of the profits of deep-processing links. Therefore, the gross profit margins of magnesium alloy and magnesium alloy deep-processing products are 22.7% (+ 12.4pcts) and 10.3% (- 12.7pcts) respectively, and the profitability of magnesium alloy deep-processing products has decreased significantly, With the passage of time, the pressure on the cost side is expected to be gradually transmitted downward, and the profitability of products will rise;
Financial data: during the reporting period, the company's administrative expenses decreased by 12.3% year-on-year, mainly due to the decrease of the company's funds; Financial expenses increased by 40.4% year-on-year, mainly due to the increase of exchange loss and bank loan interest; R & D expenses increased by 33.5% year-on-year, mainly due to the increase of R & D projects of the company; The net cash flow from operating activities decreased by 89% year-on-year, mainly due to the increase of accounts receivable and inventories compared with the same period of last year after the increase of sales;
Continuous development of growth space: at present, the company has a total capacity of 100000 tons of original magnesium and 200000 tons of magnesium alloy, and has built a 300000 tons of high-performance magnesium based light alloy and deep processing project in Qingyang County, Anhui Province, which has been officially started by the end of 2021. In June 2021, the company acquired 100% equity of Tianjin Liuhe Magnesium Products Co., Ltd. and added a new production base of automobile lightweight parts in the north. The medium and long-term scale advantage has been continuously strengthened and the industrial chain has been continuously optimized. At the same time, the application field of product terminals continues to expand. In 2021, the company has begun to invest in magnesium building formwork project and has been batch tested in construction projects. In 2022, it will supply in batches and form a scale to improve the use of magnesium in the construction field and respond to the development trend of energy-saving and green buildings;
The company will fully benefit from the opening of the lightweight track: due to the low level of magnesium manufacturing in China, the insufficient agglomeration effect of the industry supply side, the weak subjective application intention of the downstream, cost factors and other factors, the promotion process of magnesium alloy lightweight in the early stage is slow. However, in the future, the lightweight demand of the two scenarios of automobile and Aerospace will effectively drive the consumption of magnesium alloy, among which the automobile industry is still the most anticipated industry demand explosion point. In addition, the early epidemic had a negative impact on the industry's profits, coupled with the constraints of environmental protection policies, and the overall willingness to invest was weak, forming a situation that the supply side was easy to reduce but difficult to increase. In terms of medium and long-term supply and demand environment, there is a high probability that the prosperity of the industry will continue to improve Nanjing Yunhai Special Metals Co.Ltd(002182) as a leading enterprise in the magnesium industry, the global market share of magnesium alloy is more than 35%. Relying on the upstream scale and cost advantages, it is gradually extending to the downstream deep processing links. The cost advantages of each link will be superimposed on the end products to form a huge competitive advantage. With the strategic shareholding of Baosteel, technology and resource sharing can be realized, Qiangqiang alliance is expected to expand the application of magnesium products in the terminal market, especially in the automotive field. With the gradual opening of downstream market space, the company will fully benefit from the end products;
Investment suggestion: the volume and price of magnesium aluminum alloy products increase together to boost the company's performance, continue to explore the medium and long-term growth space, further consolidate the leading position of the magnesium industry, open the lightweight track, and the company is expected to fully benefit. It is estimated that the company's operating revenue from 2022 to 2024 will be 113 / 129 / 17.9 billion yuan respectively, with a year-on-year increase of 39% / 14% / 39%, and the net profit attributable to the parent company will be 880 / 11.2 / 1.84 billion yuan respectively, with a year-on-year increase of 79% / 27% / 64%, corresponding to pe14x / 11x / 7X, maintaining the "buy" rating.
Risk tip: the promotion of Qingyang project is blocked, the downstream demand risk, and the lightweight process is less than expected.
