\u3000\u30 China Baoan Group Co.Ltd(000009) 33 Henan Shenhuo Coal&Power Co.Ltd(000933) )
Event: Henan Shenhuo Coal&Power Co.Ltd(000933) released the annual report for 2021. The operating revenue in 2021 was 34.452 billion yuan, an increase of 83.16% year-on-year. In 2021, the net profit attributable to the parent company was 3.234 billion yuan, with a year-on-year increase of 802.57%, of which the net profit attributable to the parent company in 2021q4 was 935 million yuan, with a year-on-year increase of 759.44% and a month on month increase of 11.80%. In 2021, the net profit deducted from non parent company was 3.488 billion yuan, with a year-on-year increase of 390391%, of which the net profit deducted from non parent company in 2021q4 was 1.256 billion yuan, with a year-on-year increase of 691.76% and a month on month increase of 48.73%. In addition, in 2021, the company made a total provision for asset impairment and credit impairment loss of 3.587 billion yuan.
Aluminum and coal businesses contribute to the main revenue and profits, and competitive electricity charges and self provided anode carbon blocks strengthen profitability. As of December 31, 2021, the company’s electrolytic aluminum production capacity is 1.7 million tons / year (800000 tons / year of coal and electricity in Xinjiang and 900000 tons / year of Shenhuo in Yunnan), with an installed capacity of 2000MW, 560000 tons / year of anode carbon block and 80000 tons / year of aluminum foil. In terms of products, the aluminum business and coal business contributed more than 90% of the revenue: the aluminum business revenue was 23.699 billion yuan, a year-on-year increase of + 85.54%, accounting for 68.79%, the gross profit was 8.266 billion yuan, accounting for 67.23%, and the gross profit margin was about 35.06%, a year-on-year increase of + 11.34pct. The revenue of coal business was 7.705 billion yuan, a year-on-year increase of + 96.54%, accounting for 22.36%, contributing a gross profit of 3.781 billion yuan, accounting for 30.76%, and a gross profit margin of about 49.08%, a year-on-year increase of + 30.83pct. The company has built a relatively complete electrolytic aluminum industry chain in Xinjiang. The 800000 T / a electrolytic aluminum production line is equipped with anode carbon block, coal-fired generator set and coal conveying belt corridor, which casts the moat of the core competitiveness of enterprises.
The volume and price of electrolytic aluminum and coal rose together to help release performance. 1) In 2021, the production and sales of the company’s aluminum products were 1.4066/1.4176 million tons, respectively, 87.64% and 88.32% of the annual plan, with a year-on-year increase of 37.52% / 40.33%, benefiting from the operation of the subsidiary Yunnan Shenhuo hydropower aluminum integration project. In terms of price, the average price of spot aluminum in the Yangtze River in 2021, including tax, was 18905 yuan / ton, with a year-on-year increase of 33.2%; 2) The company’s coal production and sales were 6.5373/6.5449 million tons, respectively, 102.95% and 103.07% of the annual plan, with a year-on-year increase of 16.93% / 13.92%. In terms of price, according to Hithink Royalflush Information Network Co.Ltd(300033) data, the average price of anthracite in Yongcheng area was 1500 yuan / ton in 2021, with a year-on-year increase of 38.8%; 3) The production and sales of anode carbon blocks were 5660 / 554700 tons respectively, completing 102.91% and 100.85% of the annual plan respectively, with a year-on-year increase of 17.43% / 25.93%; 4) The production and sales of aluminum foil were 54100 tons / 59700 tons, respectively, 151.41% and 167.23% of the annual plan, with a year-on-year increase of 102.45% / 64.12%. The first phase of Shenlong Baoding high-end double zero aluminum foil project, a subsidiary of the company, was put into operation, contributing to the output increment.
The existing business expanded steadily, seized the opportunity of new energy batteries and expanded new highlights of performance growth. According to the company’s annual report, in 2022, the company plans to produce 6.6 million tons of commercial coal, 1.4 million tons of aluminum products, 510000 tons of carbon products, 10.17 billion kwh of self power supply, 1.980 billion kwh of electricity sales, 55000 tons of shaped coke and 77000 tons of aluminum foil, so as to achieve production and sales balance. It is estimated that the annual operating revenue will reach 33 billion yuan, and the total operating profit from the main business will reach 5 billion yuan. The company’s long-term incremental projects and plans include: 1) in terms of coal, the joint commissioning of reconstruction and expansion of Liangbei Coal Mine was successfully completed, and the production capacity increased from 900000 tons to 2.4 million tons. 2) In terms of aluminum processing, the company’s current aluminum foil production capacity is 80000 tons, including 25000 tons of Shanghai Shenhuo aluminum foil, 55000 tons of Shenlong Baoding, 55000 tons of Shenlong Baoding double zero aluminum foil project phase I is in full production operation, and 50000 tons of phase II project will start construction recently. The certification of Shenlong Baoding battery foil is expected to be completed in the first half of 2022, In addition, Shenlong Baoding has passed the resolution on the production and construction project of new energy power battery materials with an annual output of 60000 tons.
Investment suggestion: we expect the company to achieve operating revenue of 38.653 billion yuan, 40.798 billion yuan and 46.666 billion yuan respectively in 20222024, and net profit of 5.091 billion yuan, 5.708 billion yuan and 6.285 billion yuan respectively, with corresponding EPS of 2.26, 2.54 and 2.79 yuan / share respectively. At present, the corresponding PE share price is 6.5, 5.8 and 5.2 times. Maintain the “Buy-A” rating, and the six-month target price is 20.2 yuan / share.
Risk warning: the demand is less than expected, the product price fluctuates, the environmental protection risk and project progress are less than expected
