\u3000\u3 Shengda Resources Co.Ltd(000603) 993 China Molybdenum Co.Ltd(603993) )
Event: on March 18, 2022, the company released the annual report of 2021. In 2021, the company achieved a revenue of 173863 billion yuan, a year-on-year increase of 53.9%; The net profit attributable to the parent company was 5.106 billion yuan, a year-on-year increase of 119.3%; Net profit deducted from non parent company was 4.103 billion yuan, an increase of 276.2% year-on-year. In 2021q4, the company achieved a revenue of 47.304 billion yuan, an increase of 44.8% year-on-year and 13.3% month on month; The net profit attributable to the parent company was 1.548 billion yuan, an increase of 115.2% year-on-year and 34.6% month on month; The net profit deducted from non parent company was 2.189 billion yuan, with a year-on-year increase of 549.9% and a month on month increase of 326.7%. The performance is in line with our expectations.
The year-on-year increase in performance in 2021 is mainly due to the simultaneous increase in volume and price of major metal varieties. In 2021, the average annual prices of copper, cobalt, molybdenum, tungsten, niobium and phosphorus increased by 50.61%, 56.02%, 82.76%, 29.07%, 71.6% and 105.93% respectively year-on-year. The company's output of copper TFM, cobalt, molybdenum, tungsten, niobium and phosphorus increased by 14.53%, 19.86%, 18.9%, - 0.25%, - 7.68% and 2.41% respectively year-on-year. The production of 10K project in September 2021 helped to increase the output of copper and cobalt.
In a single quarter, the net profit attributable to the parent company of 2021q4 increased by 398 million yuan month on month. The growth was mainly from gross profit (+ 1.948 billion yuan) and minority shareholders' profit and loss (+ 571 million yuan). The increase in gross profit is mainly due to the simultaneous rise in the volume and price of copper and cobalt, while the profit reduction items are mainly income tax (- 538 million yuan), expenses and taxes (- 247 million yuan), impairment loss (- 18 million yuan), other / investment income (- 138 million yuan), changes in fair value (- 1159 million yuan) and non operating profit (- 20 million yuan).
The company announced the production guidelines for 2022, increased the output of copper, cobalt and niobium, and increased the volume of physical trade.
The production plan of the company in 2022 is: 2270 Guosheng Financial Holding Inc(002670) 00 tons of TFM copper, 175 Zhejiang Sanhua Intelligent Controls Co.Ltd(002050) 0 tons of cobalt metal, 480000 tons of molybdenum metal, 61 Shandong Xinneng Taishan Power Generation Co.Ltd(000720) 00 tons of tungsten metal, 82009500 tons of niobium metal, 1040122000 tons of phosphate fertilizer, 225 Shenzhen Ruihe Construction Decoration Co.Ltd(002620) 0 tons of NPM copper, 172-2.02 ounces of NPM gold and 770-9.1 million tons of trade. The median value of the guidance changes year-on-year in 2021 by + 18.11%, + 2.7%, - 15.78%, - 23.19%, 3.07%, 0.89% and 3.47% respectively -14.9% and 29.29%.
The output of copper and cobalt in the Democratic Republic of the Congo has doubled in three years, and the resource advantage is accelerating to be transformed into output advantage. ① 10K project will be fully put into production in September 2021, adding 88500 tons of copper and cobalt production capacity and 7280 tons of copper and cobalt production capacity, contributing a large increment year-on-year in 2022. ② At present, the feasibility study of TFM mixed ore project has been completed and is expected to be put into operation in the second half of 2023. After reaching the production capacity, it is expected to increase the annual output of copper by about 200000 tons and the annual output of cobalt by about 17000 tons. ③ KFM project: a green space project with great potential, and the feasibility study plan is advancing steadily. With the gradual expansion of various projects, it is expected that the company's copper output will reach 27.1/33.5/51.556000 tons and cobalt output will reach 1.9/2.5/4.552000 tons from 2022 to 2025.
Profit forecast and investment suggestions: the company is an international mining giant with strong resource endowment and cost advantages. It is expected that the company will gradually complete the gorgeous transformation from a simple mining investment enterprise to a two wheel drive enterprise for investment and operation. We raised the company's profit forecast. It is estimated that the net profit attributable to the parent company from 2022 to 2024 will be 8.441 billion yuan, 9.141 billion yuan and 13.167 billion yuan, EPS will be 0.39, 0.42 and 0.61 yuan respectively, and the PE corresponding to the latest share price (March 18) will be 13X, 12x and 8x respectively, maintaining the "recommended" rating of the company.
Risk tip: the progress of the project is not as expected, the prices of copper, cobalt and other major metals fall, geopolitical risks, etc.
