\u3000\u30 China Baoan Group Co.Ltd(000009) 33 Henan Shenhuo Coal&Power Co.Ltd(000933) )
Event: on March 28, 2022, the company released its 2021 annual report. In 2021, the company achieved a revenue of 34.452 billion yuan, a year-on-year increase of 83.2%; The net profit attributable to the parent company was 3.234 billion yuan, a year-on-year increase of 802.6%; Net profit deducted from non parent company was 3.488 billion yuan, with a year-on-year increase of 3903.9%. In 2021q4, the company achieved a revenue of 9.631 billion yuan, a year-on-year increase of 124.5% and a month on month increase of 3.5%; The net profit attributable to the parent company was 935 million yuan, turning losses into profits and increasing profits by 1.069 billion yuan year-on-year, an increase of 11.8% month on month; Deducting the net profit not attributable to the parent company was 1.256 billion yuan, turning the loss into profit and increasing profit by 1.468 billion yuan year-on-year, an increase of 48.7% month on month. The performance is in line with the performance express.
Announce the company’s annual production plan. In 2022, the company plans to produce 6.6 million tons of commercial coal and 1.4 million tons of aluminum products. It is estimated that the annual operating income will be 33 billion yuan, and the total operating profit of the main business will be 5 billion yuan. It is worth noting that the company’s performance guidance is based on the price of 18500 yuan / ton of aluminum and 1250 yuan / ton of anthracite clean coal and 1400 yuan / ton of lean clean coal respectively. The current market price has increased greatly.
In 2021q4, the net profit attributable to the parent company increased year-on-year and month on month. In terms of spin off, the increase of net profit attributable to the parent company was mainly due to the increase of gross profit. Electrolytic aluminum sector: in 2021q4, the average price including tax of electrolytic aluminum was 20043 yuan / ton, with a month on month decrease of 2.37%. The prices of cost side coal (Q4 + 10.85%), alumina (Q4 + 24.96%) and prebaked anode (Q4 + 17.87%) increased rapidly month on month, and it may be difficult for electrolytic aluminum sector to contribute to the increase of gross profit in the fourth quarter. Coal sector: the average market price of lean coal in 2021q4 is 2193 yuan / ton, a month on month increase of + 37%; The average market price of anthracite is 2277 yuan / ton, a month on month increase of + 38%. Therefore, the improvement of Q4 performance may mainly come from the contribution of the coal sector. The gross profit of the company increased by 610 million yuan and 2.57 billion yuan respectively on a year-on-year basis, making the net profit attributable to the parent company of Q4 rise on a year-on-year basis.
Future highlights: 1) the resumption of production will be accelerated in 2022, and Yunnan Shenhuo will build 150000 tons or put into full operation at the end of April. According to the current production resumption progress, the company’s electrolytic aluminum output will reach 1624000 tons, a year-on-year increase of 16.0%, and the equity output will reach 1158000 tons, a year-on-year increase of 9.2%. 2) Shenlong Baoding’s new 60000 ton aluminum foil project began construction, and the power battery foil certification may be passed in the first half of the year. The 55000 ton double zero aluminum foil of Shenlong Baoding phase I has been completed and put into operation. At present, it mainly produces food foil and medicine foil, and is expected to switch to power battery foil in the future. It is expected that the certification of battery foil will be completed in the first half of 2022. In addition, Shenlong Baoding phase II investment in the production and construction of new energy power battery materials with an annual output of 60000 tons has been approved and started construction. 3) The industry continues to boom, and the price of coal and aluminum remains high. As of March 28, 2022, the average price of electrolytic aluminum since the beginning of the year is 22032 yuan / ton, and the average price of anthracite clean coal and lean clean coal since the beginning of the year is 2244 yuan / ton and 2070 yuan / ton.
Investment suggestion: European supply is limited, superimposed with the conflict between Russia and Ukraine, global supply is tightening, Chinese demand is driven by steady growth, and coal and aluminum are expected to maintain high prices. With the gradual promotion of the company’s resumption of production capacity in Yunnan, there is still room for growth in the company’s output in 2022. According to the 21000 aluminum price from 2022 to 2024, we raised the profit forecast. It is expected that the company will realize the net profit attributable to the parent company of 6.614 billion yuan, 7.089 billion yuan and 7.243 billion yuan from 2022 to 2024, with the corresponding EPS of 294 yuan, 3.15 yuan and 3.22 yuan respectively. The PE corresponding to the current stock price (March 28) is 5, 5 and 5 times respectively, maintaining the “recommended” rating of the company.
Risk tips: downstream demand is lower than expected, overseas natural gas prices fall, power and production restrictions exceed expectations, etc.
