\u3000\u30 Shenzhen Zhenye(Group)Co.Ltd(000006) 29 Pangang Group Vanadium Titanium & Resources Co.Ltd(000629) )
Event overview: on March 28, the company released its 2021 annual report: in 2021, the company realized a net profit attributable to the parent company of 1.328 billion yuan, a year-on-year increase of 248.56%; Deducting the net profit not attributable to the parent company was 1.001 billion yuan, with a year-on-year increase of 367.67%. Quarterly, in 2021q4, the company achieved a revenue of 3.111 billion yuan, a year-on-year increase of 12.83%; The net profit attributable to the parent company was 545 million yuan, a year-on-year increase of 145066%; Net profit deducted from non parent company was 224 million yuan, with a year-on-year increase of 895.66%.
Comments:
① sales volume: in 2021, the sales volume of vanadium products, titanium dioxide and titanium slag increased by 0.77%, 4.03% and 6.12% respectively. By fully releasing the scale of production capacity, the company has achieved positive growth in the production and sales of its main products. In 2021, the sales volume of vanadium products of the company was 42600 tons (including Xichang vanadium products), with a year-on-year increase of 0.77%; The sales volume of titanium dioxide was 247400 tons, with a year-on-year increase of 4.03%; The sales volume of titanium slag was 213600 tons, with a year-on-year increase of 6.12%.
② price: the price of titanium products increased significantly, and the gross profit margin increased to 19.92%. In 2021, the prices of vanadium pentoxide, titanium dioxide and acid titanium slag increased by 18.6%, 40.5% and 42.83% respectively. Meanwhile, the company’s raw materials mainly come from the parent company, and the cost source is stable. It is estimated that the unit cost of vanadium products decreased by 3.47% (Xichang vanadium products consolidated table), the unit cost of titanium dioxide and titanium slag increased by 21.99% and 35.13% respectively. In 2021, the gross profit margin of vanadium products and titanium products increased to 30.35% and 17.74% respectively, The overall gross profit margin of the company increased by 8.28pct to 19.92%.
Future core focus:
① the successful acquisition of Xichang vanadium products + the signing of a strategic agreement with Sichuan Desheng group will make the company’s leading position in vanadium products more stable. In 2021, the company successfully completed the acquisition of Xichang vanadium products (18000 tons of vanadium products capacity), and the existing vanadium products capacity reached 40000 tons (calculated by V2O5), which is the largest in the world. In addition, the company has signed a cooperation framework agreement with Sichuan Desheng. The two sides plan to set up a joint venture to invest in the construction of a vanadium slag processing production line of V2O5 with a capacity of 20000 tons. The capacity of equity vanadium products of the company is expected to reach 54000 tons in the future. At that time, the leading position will be more stable.
② vanadium battery has broad development prospects and is expected to become an important performance growth point of the company in the future. In 2021, the company signed a cooperation agreement with Dalian Borong and its related subsidiaries and joint-stock companies to process the company’s ammonium polyvanadate raw materials into vanadium energy storage medium, which will be fully used in the “national demonstration project (phase I) of Dalian flow battery energy storage and peak shaving power station” project of constant current company (Dalian Borong joint-stock company). The company’s vanadium battery has broad development prospects and is expected to become an important performance growth point in the future.
③ the stock incentive plan lays the foundation for the long-term development of the company. In January 2022, the company granted 13.28 million restricted shares to 95 incentive objects, including directors, managers and core backbone personnel of the company, accounting for 0.15% of the total share capital of the company at the time of announcement of the incentive plan, and the grant price was 2.08 yuan / share. The stock incentive plan will effectively enhance the company’s cohesion, enhance the company’s competitiveness and lay the cornerstone for the company’s long-term development.
Investment suggestion: the company’s vanadium production capacity is at the forefront of the world. With the improvement of the prosperity of the vanadium industry and the gradual expansion of the vanadium battery application market, the company’s performance can be released. We expect that the net profit attributable to the parent company from 2022 to 2024 will be RMB 1.754/2.247/2.724 billion in turn, corresponding to the closing price of RMB 3.76 on March 29, 2022, and PE will be 18 / 14 / 12 times in turn from 2022 to 2024. The company will be given a “recommended” rating for the first time.
Risk warning: downstream demand is less than expected; The development of vanadium battery is less than expected; The project is not progressing as expected
