\u3000\u3 Shengda Resources Co.Ltd(000603) 993 China Molybdenum Co.Ltd(603993) )
The rise of both volume and price promotes the company’s outstanding performance. The annual report of the company in 2021 was released. During the reporting period, the company achieved an operating revenue of 173863 billion yuan, a year-on-year increase of 53.89%; The net profit attributable to the parent company was 5.106 billion yuan, a year-on-year increase of 119.26%; The net profit attributable to the parent company after deducting non-profit amounted to 4.103 billion yuan, a year-on-year increase of 276.24%. The net profit attributable to the parent company in Q4 in a single quarter was 1.548 billion yuan, with a month on month increase of 34.6% and a year-on-year increase of 115.2%, creating the best annual and quarterly profit level in the company’s history. EPS increased by 118.18% to 0.24 yuan from 0.11 yuan in 2020, and roe increased by 7.10 percentage points to 12.93. Benefiting from the price rise, output growth and cost control of the company’s main products, the company’s profit indicators increased significantly year-on-year.
Accelerate the construction of two world-class copper mines and invest in new energy minerals. 1) Copper cobalt sector: the 10K expansion project of copper cobalt mine in DRC was completed and put into operation in July 2021. In 2021, the copper and cobalt sector in DRC will achieve 209100 tons of copper metal, an increase of 14.53% and 18500 tons of cobalt metal, an increase of 16.71%. In 2022, it is planned to achieve the output of 2270 Guosheng Financial Holding Inc(002670) 00 tons of copper and 175 Zhejiang Sanhua Intelligent Controls Co.Ltd(002050) 0 tons of cobalt. After the TFM blending project is completed in 2023, it is planned to increase the amount of copper metal by 200000 tons / year and cobalt metal by 17000 tons / year. At that time, the company’s copper production capacity will increase from 270000 tons to 470000 tons, and the cobalt production capacity will increase from 26000 tons to 43000 tons, ranking among the first echelon of global copper and cobalt resources. KFM copper cobalt ore is still in the development and design stage. 2) In the energy metal sector, the company shares 30% of Indonesia Huayue 60000 ton hydrometallurgical nickel smelting project, which was officially put into operation at the end of 2021. In the future, the company will focus on new energy metals, accelerate market research in key regions such as Africa, South America and Southeast Asia, promote new key projects tracked, and wait for opportunities to seek extension investment.
Another breakthrough was made in reducing costs and increasing efficiency, and remarkable achievements were made in team building. 1) Another breakthrough was made in the three-year cost reduction plan. After completing the target of reducing the capital by 500 million US dollars ahead of schedule in 2020, the company will reduce the capital by 1.6 billion yuan in 2021 to consolidate the advantage of low-cost operation; 2) The “5233” management structure was implemented. Set up and complete the global operation and management team with President sun Ruiwen as the core, send Chinese core backbone to DRC, Australia, Brazil and ixm, and continuously promote the upgrading of management level; The rating of msciesg is upgraded to a, which is at the same level as Rio Tinto, BHP Billiton and Anglo American resources; 3) Formulate the development path of “three steps”. The first step is to “lay the foundation” to reduce costs and increase efficiency, the second step is to “step up” to double production capacity, and the third step is to “make a great leap forward” to create a world-class. 2022 is positioned as the construction year. It will accelerate the construction of two world-class mines in the Democratic Republic of the Congo, move from the first step to the second step, and become a “respected, modern and world-class resource company”.
Investment suggestion: we estimate that the net profit attributable to the parent company from 2022 to 2024 will be 6.795 billion yuan, 8.074 billion yuan and 11.295 billion yuan respectively, corresponding to 16.6, 14.0 and 10.0 times of PE and 2.4, 2.1 and 1.8 times of Pb respectively. We believe that the total copper and cobalt resources of TFM and KFM copper and cobalt mines in the Democratic Republic of the Congo in Africa reached 30.789 million tons and 5.554 million tons respectively, laying the company’s leading position in global copper and cobalt resources. At the same time, the “5233” management structure is basically implemented, and the effect of “three-year cost reduction and efficiency increase” is remarkable. ESG rating leads China’s mining industry, laying a solid foundation for future growth. 2022 is positioned as the construction year. The construction of two world-class mines in the Democratic Republic of the Congo (DRC) will be accelerated, and the future growth can be expected to maintain the “buy” rating.
Risk tips: risk of sharp fluctuations in metal prices, overseas asset operation risk, political and policy risk
