\u3000\u30 China Baoan Group Co.Ltd(000009) 33 Henan Shenhuo Coal&Power Co.Ltd(000933) )
Company events
The company issued its annual report for 2021. 1) Throughout the year, the company achieved a revenue of 34.452 billion yuan in 2021, a year-on-year increase of + 83.16%; The net profit attributable to the parent company was 3.234 billion yuan, a year-on-year increase of + 802.57%; Realize eps1 45 yuan / share. 2) In a single quarter, the company achieved an operating revenue of 9.585 billion yuan (YoY + 123.43% / mom + 2.96%) and a net profit attributable to the parent company of 982 million yuan (YoY + 592.41% / mom + 17.46%).
Increase the price of coal and increase the performance of aluminum products
1) electrolytic aluminum business: in terms of production and sales, during the reporting period, the company accelerated the production progress of Yunnan hydropower aluminum integration project, and the sales volume of electrolytic aluminum products increased by 400000 tons year-on-year. In 2021, the company achieved an output of 1.4066 million tons, a year-on-year increase of + 37.52%, and sales of 1.4176 million tons, a year-on-year increase of + 40.33%, respectively completing 87.64% and 88.32% of the annual plan; In terms of price, thanks to the high prosperity of the industry, the price of electrolytic aluminum continued to rise. In 2021, the average price of spot aluminum in the Yangtze River excluding tax was 16700 yuan / ton, a year-on-year increase of + 33.2%, and the average price of electrolytic aluminum products of the company was 16600 yuan / ton, a year-on-year increase of + 39%; In terms of cost, affected by the increase of alumina, electricity and other costs, the unit full cost of electrolytic aluminum in 2021 was + 12.6% year-on-year, which was lower than the increase of product price as a whole.
2) coal business: in terms of production and sales, the company produced 6.5373 million tons of coal and sold 6.5449 million tons in 2021, completing 102.95% and 103.07% of the annual plan respectively, basically realizing the balance of production and sales; At the same time, benefiting from the continuous rise of coal prices, the profit contribution of the company’s coal business continued to increase. In 2021, the average sales price excluding tax per ton of the company’s coal products was 117718 yuan / ton, a year-on-year increase of + 72.5%; The gross profit per ton of coal was about 577.76 yuan / ton, a year-on-year increase of + 364.0%.
The impairment provision is sufficient and the asset quality will be improved in the future
In 2021, the company accrued 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. It mainly dealt with the historical problems of the mining right of damoling coal mine and the reorganization creditor’s rights of power plants and railways after the transfer of electrolytic aluminum production capacity. The provision was sufficient and the asset quality was further improved.
The dual businesses of coal and aluminum make concerted efforts, and the profitability of the company is expected to be greatly improved
1) the company’s electrolytic aluminum production capacity is expected to be stable: the company has 1.7 million tons of electrolytic aluminum production capacity, including 800000 tons in Xinjiang and 900000 tons in Yunnan. In Xinjiang, the coal price in Xinjiang has been decoupled from that in the mainland, and the power cost has always been maintained at about 0.2 yuan / kWh, maintaining the stable operation of 800000 ton capacity projects. In Yunnan, since February this year, Yunnan power grid has implemented an orderly restoration of power supply to electrolytic aluminum enterprises in the province. The company’s original production capacity of 220000 tons has been started one after another, and the production efficiency has been significantly improved. With the continuous abundant power supply, the remaining 150000 tons of production capacity that the company has built but not started has also been powered on and started recently, and the 900000 tons of production capacity will be put into operation by the end of April.
2) steady increase in coal output: the reconstruction and expansion project of Liangbei Coal Mine is in the climbing production period. At present, it has the conditions for full production and operation. After the production of damoling coal mine is stable, it is expected to contribute some increment. Therefore, the company’s coal will still increase this year and next. In 2022, the company plans to produce 6.6 million tons of commercial coal.
3) aluminum foil: the 55000 ton phase I project of Shenlong Baoding double zero aluminum foil project has been completed and reached production capacity. At present, the products are mainly food and pharmaceutical packaging foil. The relevant certification of battery foil is under way and is expected to be completed in the first half of 2022.
Investment advice
We expect the company’s revenue from 2022 to 2024 to be 41.757/44.574/45.323 billion yuan respectively, with a year-on-year increase of 21.2% / 6.7% / 1.7% respectively; The corresponding net profit attributable to the parent company was RMB 5.094/58.03/6.364 billion respectively, with a year-on-year increase of 57.5% / 13.9% / 9.7% respectively. PE corresponding to the current share price is 6x / 6x / 5x respectively, maintaining the “buy” rating of the company.
Risk tips
Downstream demand is lower than expected; Coal and aluminum prices fell sharply; The resumption of production of Yunnan Shenhuo was not as expected.
