\u3000\u30 China Baoan Group Co.Ltd(000009) 33 Henan Shenhuo Coal&Power Co.Ltd(000933) )
Event: the company issued an announcement on the progress of capacity resumption. On March 21, 2022, the company announced that due to the abundant water in the dry season, the problem of power supply in Yunnan has been alleviated. Since February 22, the production capacity of 220000 tons originally discontinued has been started successively. With the continuous abundant power supply, the remaining 150000 tons of production capacity that has been completed but not started in Yunnan Shenhuo has also been powered on and started recently. The production capacity of 900000 tons will be put into operation at the end of April, and the progress of capacity recovery is higher than previously expected.
Impact on the company’s performance: output growth, annual cost decline and profit thickening.
① volume: according to our calculation, according to the current resumption progress, the annual output of electrolytic aluminum of the company will reach 1624000 tons and the output of equity will reach 1158000 tons. Previously, the company disclosed in the reply that the production guideline target of electrolytic aluminum production in 2022 is 1.4 million tons. According to the current production forecast, the annual output may increase by 16.0%, the equity output may increase by 9.2%, and the equity output may increase by 97000 tons. ② Considering that the cost per unit of Q2 will increase by about rmb8.5 million per ton, the depreciation cost per unit of Q2 is expected to be about rmb8.5 million per ton. Considering the experience of the industry, the depreciation cost per unit of Q2 will decrease by about rmb8.5 million per ton, Q3 has no tank opening cost, but only the cost of three per ton decreases. Therefore, if other factors are not considered, the cost will decline month on month. ③ Profit: according to the calculation of 22000 yuan / ton of electrolytic aluminum and 2950 yuan / ton of alumina, the net profit of Yunnan Shenhuo per ton reaches 3392 yuan, and the net profit increment of parent company corresponding to the increase of equity output may be about 330 million yuan.
Impact on the industry: the demand is good, the warehouse is continuously removed, and the supply is large, so there is no need to worry too much.
① supply: other production capacity probabilities in Yunnan are also resuming production, and the resuming production progress can be compared with Shenhuo, that is, the resuming production has been carried out since the beginning of February. If the end of April is the time node for the completion of resuming production, the resuming production progress has been more than one and a half months. In the past period, the aluminum price has not been affected by the resuming production, but the average price has reached 22032 yuan / ton since the beginning of the year, up 9% month on month, It can be seen that the current aluminum price has passed the preliminary pressure test and remains strong. ② Demand and inventory: the inventory entered the inventory removal cycle. As of March 21, 2022, the inventory of electrolytic aluminum was 1061000 tons, the lowest in the same period in recent six years, reflecting better demand, especially exports, benefiting from the widening price difference of aluminum outside China. From January to February, China exported 1034000 tons of unwrought aluminum and aluminum products, an increase of 22.8% over the same period last year. ③ Industry profit: as of March 21, 2022, we calculated that the net profit per ton of aluminum was 5416 yuan / ton, which was at a high level in the same period in history, and the profit level of electrolytic aluminum enterprises was high.
Investment suggestion: European supply is limited, superimposed with the conflict between Russia and Ukraine, global supply is tightening, Chinese demand is driven by steady growth, and coal and aluminum are expected to maintain high prices. With the gradual promotion of the company’s resumption of production capacity in Yunnan, there is still room for growth in the company’s output in 2022. According to the aluminum price of 20000 from 2021 to 2023, we raised the profit forecast. It is expected that the company will realize the net profit attributable to the parent company of 3.269 billion yuan, 6.078 billion yuan and 6.207 billion yuan from 2021 to 2023, with the corresponding EPS of 1.45 yuan, 2.70 yuan and 2.76 yuan respectively. The PE corresponding to the current stock price (March 21) is 9, 5 and 5 times respectively, maintaining the “recommended” rating of the company.
Risk tips: downstream demand is lower than expected, overseas natural gas prices fall, power and production restrictions exceed expectations, etc.
