\u3000\u30 Shenzhen Zhenye(Group)Co.Ltd(000006) 83 Inner Mongoliayuan Xing Energy Company Limited(000683) )
Event: the company released the 2021 annual report. During the reporting period, the operating revenue was RMB 12.149 billion, with a year-on-year increase of 57.81%, the net profit attributable to the parent was RMB 4.951 billion, with a year-on-year increase of + 7171%, and the net profit deducted from non attributable to the parent was RMB 2.829 billion, with a year-on-year increase of + 3682%, which was RMB 3.32/9.27/8.34/736 million in a single quarter. At the same time, the company issued 2022q1 performance forecast, which is expected to realize a net profit attributable to the parent company of 750 ~ 790 million yuan, a year-on-year increase of + 125.19 ~ 137.2%.
The company gradually returned to the main business of natural alkali. In 2021, the company successively transferred 70% equity of Boyuan coal chemical, 80% equity of Boyuan United Chemical, 51% equity of Boyuan water and 100% equity of Boyuan Yingen energy, returning from the diversified development stage to the main business of soda ash. At the same time, non recurring profits and losses of RMB 2.122 billion were generated due to the disposal of assets. At the same time, the company plans to acquire 60% equity of Yingen mining by means of acquisition and capital increase, lead the 8.6 million T / a natural alkali development and utilization project and return to the main business of natural alkali. At present, the company has a natural alkali production capacity of 1.8 million tons / year, and will have a natural alkali production capacity of 9.6 million tons / year in the future. The market share has increased from 5% to 22%, and has grown into a giant in the soda ash industry.
The competition pattern of soda ash industry tends to improve. By the end of 2021, 1.3 million T / a capacity of Jiangsu Lianyungang Port Co.Ltd(601008) alkali industry was withdrawn, and the capacity originally planned to be put into operation in April and June 2022 was postponed to the end of 2022. The prosperity of the industry will remain high. By 2025, in terms of supply, the company’s natural alkali method will lead the new production capacity in the future, the industry concentration will continue to improve, and the low-cost production capacity will force the backward production capacity to withdraw. In terms of demand, photovoltaic glass and battery cathode materials will contribute 2.37 million tons / year and 2.48 million tons / year of demand increment respectively in 2025 (relative to 2021). The calculation of supply-demand balance shows that the new capacity will be basically digested in 2024, and the tight supply pattern will reappear in 2025.
Industrial policies and cost advantages help the company lead the transformation and upgrading of the industry. From the perspective of industry average cost, the cost of natural alkali method is about 863 yuan / ton, 42% lower than 1504 yuan / ton of ammonia alkali method and 38% lower than 1382 yuan / ton of combined alkali method. Talisu natural alkali project is superimposed with factors such as high resource grade, large scale effect and low raw coal price. According to the calculation, the average total cost of the project is only 550 yuan / ton, which has more significant advantages. We expect that after the project is put into operation, the company will obtain an excess profit of 3.8 billion yuan / year, which will lead the transformation and upgrading of the industry, and then rewrite the competition pattern of the whole soda ash industry.
Investment advice: underestimate the value, grow high, and the competitive advantage cannot be copied. We expect the net profit attributable to the parent company from 2022 to 2024 to be 2.978 billion yuan, 3.930 billion yuan and 5.007 billion yuan respectively, corresponding to EPS of 0.81 yuan, 1.07 yuan and 1.36 yuan respectively, and PE of 12 times, 9 times and 7 times respectively, which is lower than that of comparable companies in the same industry. Considering that the company will grow into an industry giant in the future, its resource advantages and cost advantages cannot be copied, it will fully benefit from the growth of future demand and broad growth space, and maintain the “buy” rating.
Risk tip: the new demand is less than expected, the product price drops sharply, and the project progress is less than expected
