\u3000\u30 China Baoan Group Co.Ltd(000009) 33 Henan Shenhuo Coal&Power Co.Ltd(000933) )
Event: the company released its 2021 annual report on the evening of March 28, realizing a revenue of 34.45 billion yuan, an increase of 83% year-on-year; The net profit attributable to shareholders of listed companies was 3.23 billion yuan, a year-on-year increase of 802.6%; The net profit attributable to shareholders of listed companies after deducting non recurring profits and losses was 3.49 billion yuan, a year-on-year increase of 3903.9%. It is proposed to pay a cash dividend of 4.5 yuan (including tax) for every 10 shares.
Comments:
The performance is basically consistent with the express report, and the volume and price of coal and electrolytic aluminum rise simultaneously. The revenue of the coal sector was 7.7 billion yuan, a year-on-year increase of + 97%; The gross profit margin was 49.1%, a year-on-year increase of + 30.8 percentage points. The revenue of electrolytic aluminum sector was 23.6 billion yuan, a year-on-year increase of + 95%; The gross profit margin was 35.1%, year-on-year + 11.4 percentage points. The significant increase in performance is due to the simultaneous rise in the volume and price of electrolytic aluminum and coal. 1) volume: the sales volume of electrolytic aluminum is 1418000 tons, with a year-on-year increase of + 406000 tons. The increase is due to the production of Yunnan Shenhuo; The coal sales volume was 6.545 million tons, a year-on-year increase of + 800000 tons. 2) Price: the average price of electrolytic aluminum products in 2021 was 16628 yuan / ton, a year-on-year increase of + 39%; The average price of coal products was 1177 yuan / ton, a year-on-year increase of + 73%.
Asset impairment dragged down performance, operating cash flow hit a record high and roe hit a new high since 2009. In 2021, the company made provision for asset impairment loss of 2.845 billion yuan and credit impairment loss of 742 million yuan, with a total amount of 3.587 billion yuan, mainly due to the provision for asset impairment of mining rights of damoling coal mine and the provision for asset impairment of reorganization creditor’s rights of subsidiaries Shenhuo power generation, Shenhuo railway transportation and Huiyuan aluminum. In 2021, the operating cash flow was 11.3 billion yuan, a year-on-year increase of + 556%, a record high; Roe (diluted) 34.53%, year-on-year + 29.4 percentage points, a new high since 2009; The construction in progress decreased from 4.98 billion yuan in 2020 to 1.08 billion yuan in 2021, mainly due to the completion and operation of Yunnan Shenhuo aluminum project.
Supply disturbance, demand improvement, optimistic about the rise of aluminum price and the high profit per ton of aluminum. China’s electrolytic aluminum enterprises have gradually resumed production, but due to the epidemic in Baise, Guangxi, 420000 tons of production has been stopped, and the speed of output increase is overall or slow; At the same time, energy prices are high, European aluminum enterprises are still expected to further reduce production, and overseas supply continues to be disturbed. As of March 18, the national spot inventory of electrolytic aluminum was 1.052 million tons, down 92000 tons from the inventory peak on March 7, entering the inventory removal cycle; Despite the short-term disturbance caused by the epidemic to the recovery of downstream operation rate, we are still optimistic about the peak season of downstream operation of aluminum in the second quarter, continue to be bullish on aluminum prices, and the profit per ton of aluminum is expected to remain high.
Profit forecast, valuation and rating: considering the limited overseas supply and the slow recovery of China’s output, the aluminum price in 2022 / 2023 / 2024 was raised to 20000 / 19500 / 19500 yuan / ton. At the same time, the company’s production capacity of Yunnan Aluminum in 2022 / 2023 will be gradually put into operation, and the company’s profit forecast will be adjusted accordingly. It is estimated that the net profit in 2022 / 2023 will be 6.3/6.7 billion yuan, with an increase of 42% / 31% respectively, the new net profit forecast in 2024 will be 7 billion yuan, and the PE corresponding to the current stock price will be 5.3/5.0/4.8 times respectively, maintaining the “overweight” rating.
Risk tip: the uncertainty of the impact of Yunnan power restriction policy on output; Long term high risk of interest bearing liabilities; Risk of falling aluminum and coal prices.
