\u3000\u3 China Vanke Co.Ltd(000002) 978 Sichuan Anning Iron And Titanium Co.Ltd(002978) )
Event: the company released its annual report, and achieved a total operating revenue of 2.303 billion yuan in 2021, an increase of 40.75% year-on-year; The net profit attributable to the parent company was 1.435 billion yuan, a year-on-year increase of 104.85%; The non net profit attributable to the parent company was 1.399 billion yuan, a year-on-year increase of 104.85%; EPS was 3.58 yuan / share, a year-on-year increase of 97.93%; Roe was 32.08%.
Comments:
The price rise of titanium concentrate and iron concentrate promoted the company’s performance to increase significantly. The company’s revenue and net profit increased significantly in 2021, mainly because the prices of the company’s main products titanium concentrate and iron concentrate increased significantly. In 2021, the company sold 537600 tons of titanium concentrate, basically the same as that of the previous year; Sales of vanadium titanium iron concentrate (61%) were 1.416 million tons, with a year-on-year increase of 9.79%. In 2021, the average sales price of titanium concentrate increased by 52.28% to 2364 yuan / ton, and the cost increased by 17.95% to 431 yuan / ton; The average sales price of vanadium titanium iron concentrate (61%) increased by 20.61% to 720 yuan / ton, and the cost decreased by 14.39% to 246 yuan / ton, which directly promoted the gross profit margin of titanium concentrate from 76% to 82%, and that of vanadium titanium iron concentrate (61%) from 52% to 66%. The company’s profitability continues to improve, with abundant cash flow (the company’s balance of cash and cash equivalents at the end of 2021 is 2.178 billion yuan) and very low debt level (the asset liability ratio at the end of 2021 is 19.04%, there is no long-term and short-term borrowings, and the net inflow of financial expenses is 27.1 million yuan).
The company has obvious resource advantages and has the ability of extensive M & A. The company owns the mining right of panjiatian iron mine, which is the largest titanium concentrate supplier in China. At the same time, it is the only manufacturer of high-grade vanadium titanium iron concentrate (TFE 61%) in Panxi. The company has strong bargaining power in the titanium concentrate market, and the price volatility of vanadium titanium iron concentrate products is less than that of pure iron. One “spear” and one “shield” ensure the profitability of the company. Based on the existing panjiatian ilmenite resources, with abundant cash flow reserves and convenient financing channels, the company has the ability to expand M & A and increase resource reserves.
Titanium ore prices are expected to continue to rise, and the company continues to benefit. Affected by the decline of international titanium mining grade and reserves and the tightening of environmental protection policies in various countries, the growth rate of global titanium production has declined since 2018, and the year-on-year growth rate of titanium production in 2020 is only 3.9%. China’s titanium ore supply depends on imports. According to the General Administration of Customs in 2021, China imported about 3.8 million tons of titanium ore (including titanium wool ore and titanium middling ore). The scarcity of global high-grade titanium resources is becoming increasingly apparent. For example, the Western Australia and Murray basin mines in Australia have dried up, the Kwale mine in Kenya and the ginkgo crayfish snapper mines in Australia are about to dry up. In terms of demand, the total output of titanium dioxide in China in 2021 was about 3.8135 million tons, an increase of 2935 thousand tons over 2020, equivalent to an increase in demand for titanium concentrate of about 6751 thousand tons; The output of sponge titanium is 144900 tons, an increase of 31500 tons compared with 2020, equivalent to an increase of about 126000 tons in demand for titanium concentrate. In 2021, the supply of titanium concentrate has been in a tight state, and the annual price fluctuates in the range of 24 Changzhou Qianhong Biopharma Co.Ltd(002550) yuan / ton (according to the data of Baichuan Yingfu). At present, the tax free price of Baichuan titanium mine is 2500 yuan / ton. With the new production capacity of titanium dioxide and the growth of demand for high-end titanium materials in 2022, we expect that the supply and demand of titanium ore will continue to maintain a tight balance, and the price of titanium ore is expected to maintain a high boom. As a leader in titanium ore, the company has benefited significantly and its performance is expected to continue to grow.
Profit forecast and investment rating: combined with the company’s titanium concentrate and iron concentrate production capacity and price judgment, we predict that the company’s net profit attributable to the parent company from 2022 to 2024 will be RMB 1.703 billion, 1.842 billion and 1.974 billion respectively, EPS will be RMB 4.25, 4.59 and 4.92/share, and the PE corresponding to the current stock price is 10x, 9x and 8x. Considering that the price of titanium concentrate is expected to continue to rise and the extension expansion ability supported by the company’s excellent financial situation, the “buy” rating of the company is maintained.
Risk factors: the price of titanium concentrate or iron concentrate falls; The demand for titanium dioxide decreased.
