Nanjing Yunhai Special Metals Co.Ltd(002182) (002182)
Core view
The company’s performance is expected to double in 2021, and its profit in the fourth quarter hit a record high. Nanjing Yunhai Special Metals Co.Ltd(002182) the performance forecast for 2021 was disclosed on the evening of January 5. The company expects to make a profit of 500 million yuan to 580 million yuan in 2021, an increase of 105.13% – 137.95% over the same period of last year. The increase in performance was mainly due to the increase in product prices, gross profit margin and sales volume. Meanwhile, the impact of non recurring profit and loss on net profit in the current period is expected to be about 70 million yuan (the impact of non recurring profit and loss on net profit in the same period of last year is 15.3024 million yuan). In the fourth quarter, the company’s net profit in a single quarter is expected to exceed 300 million (according to the upper limit of performance forecast guidelines), setting a new high of net profit in a single quarter.
Benefiting from the sharp rise of magnesium price, the company’s smelting end profit released significantly. Since the third quarter of this year, the price of magnesium ingots has risen sharply. At present, it has exceeded 51000 yuan / ton, an increase of more than 220% over the beginning of the year. Although the price of magnesium in the fourth quarter was lower than the high point in the third quarter, it still operated around 40000-50000 yuan / ton. At the same time, the price of ferrosilicon and coal at the end of raw materials fell, and the company’s original magnesium smelting profit exceeded 20000 yuan / ton. The fourth quarter net profit of the company is expected to grow by more than 120% month on month, and the smelting end performance is fully released.
The new production capacity is gradually implemented, and the company’s performance explosion period is expected to start. With the gradual operation of Chongqing Bo’ao phase II project, the release of Chaohu Yunhai die casting capacity and the steady construction of Qingyang project, the company is expected to achieve a leap forward development in magnesium aluminum materials and upstream resource capacity in the next two years. Recently, the company announced that it plans to invest in a 150000 ton / year lightweight aluminum extruded profile and supporting project in Chaohu, Anhui Province, mainly producing extruded profile products for aluminum body structural parts of new energy vehicles. After the project is completed, the annual net profit is expected to be 210.46 million yuan. The company has continued to expand production capacity and product line in recent years, and is expected to enter the harvest period from this year.
It is optimistic that the downstream demand for magnesium will burst in 2022, and the company’s integration leading position is stable. We believe that with the gradual increase of lithium battery magnesium alloy structural parts and the increase of permeability of magnesium alloy building formwork. The downstream demand for magnesium is expected to burst in 2022. As the leader of magnesium smelting and deep processing integration in China, relying on the deep resources of Baosteel metal, the second shareholder, and taking advantage of the cost advantage of the upstream smelting end, the company is expected to fully enjoy the growth dividend of the industry.
Investment suggestion: as a leading enterprise integrating magnesium smelting and deep processing, with the gradual implementation of new production capacity, Nanjing Yunhai Special Metals Co.Ltd(002182) is expected to enter the performance release period. The company’s operating revenue is expected to reach RMB 9.997 billion, RMB 11.549 billion and RMB 12.993 billion from 2021 to 2023, with net profits attributable to the parent company of RMB 550 million, RMB 617 million and RMB 662 million respectively, and EPS of RMB 85 million, 0.95 million and 1.02 million respectively. For the first time, give a “buy” rating.
Risk tip: magnesium price falls, and the progress of new capacity is less than expected
