\u3000\u3 Shengda Resources Co.Ltd(000603) 993 China Molybdenum Co.Ltd(603993) )
Core conclusion
Event: the company released its 2021 annual report. In 2021, the annual revenue reached 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%. In Q4 of 2021, the operating revenue reached 47.304 billion yuan, with a year-on-year increase of 44.77% and a month on month increase of 13.32%; The net profit attributable to the parent company was 1.548 billion yuan, with a year-on-year increase of 115.19% and a month on month increase of 34.61%. The performance was in line with expectations.
The new production capacity expanded the scale effect, and the volume and price of main products increased simultaneously. The 10K expansion project of copper cobalt mine in the Democratic Republic of the Congo (DRC) has been completed and put into operation in July 2021, and the daily ore processing capacity has increased by 10000 tons. In 2021, the annual output of TFM copper metal was 209100 tons, with a year-on-year increase of 14.53%, and the output of cobalt metal was 18500 tons, with a year-on-year increase of 19.86%. The average price of electrolytic copper in 2021 was 68200 yuan / ton, with a year-on-year increase of 40.53%; The average price of metal cobalt in 2021 was 375800 yuan / ton, with a year-on-year increase of 42.34%. The continuous promotion of production expansion will bring scale effect, and the profitability of the company is expected to be improved.
The results of cost reduction and efficiency increase have been shown to maintain the company’s market competitiveness. The company’s management structure was upgraded from 2019 to 2020, and the three-year cost reduction of US $500 million was planned to be completed ahead of schedule, which is conducive to accelerating the release of performance. The profitability of the company has been enhanced under cost reduction and efficiency increase. The annual gross profit margin and net profit margin in 2021 were 9.39% and 3.12% respectively, with a year-on-year increase of 1.92pct and 0.93pct.
The trade business performed well and the synergy advantage appeared. In 2021, ixm, the company’s metal trading business, set a historical record in terms of annual trade volume and profit. The annual physical sales volume was 6.5 million tons, an increase of 1.16 million tons year-on-year. The pre tax profit reached US $163 million, exceeding the historical high total profit in 2020. At the same time, ixm has built a global logistics and storage system, and an excellent supply chain system helps the company reduce costs in the transportation process.
Investment suggestion: it is predicted that the company’s net profit attributable to the parent company in 21-23 years will be 73.69/83.77/10.230 billion yuan and EPS will be 0.34/0.39/0.47 yuan, maintaining the “buy” rating.
Risk tips: the expansion of the project is less than expected, the downstream demand is less than expected, and the trade sector is affected by the epidemic
