\u3000\u30 China High-Speed Railway Technology Co.Ltd(000008) 78 Yunnan Copper Co.Ltd(000878) )
Core view
The performance increased by 71% in 2021. In 2021, the annual revenue was 127058 billion yuan (+ 43.99%), the net profit attributable to the parent company was 649 million yuan (+ 71.00%), the net profit not attributable to the parent company was 366 million yuan (- 34.62%), and the net cash flow from operating activities was 5.066 billion yuan (+ 3.74%). In the fourth quarter, the single quarter revenue was 34.057 billion yuan (+ 51.8%), the net profit attributable to the parent company was 128 million yuan (+ 292.5%), and the net profit not attributable to the parent company was 93 million yuan (- 7.5%). The company plans to distribute a cash dividend of 2 yuan for every 10 shares to all shareholders.
The operating cash flow remained high and the asset liability ratio decreased. In 2021, the net cash flow from the company’s operating activities was 5.066 billion yuan. By the end of 2021, the company’s asset liability ratio was 66.1%, which was significantly lower than 70.4% at the end of 2020. The company’s financial expenses in 2021 were 930 million yuan, basically the same as that in 2020.
The company plans to acquire 38.23% equity of Diqing nonferrous metals held by Yunnan Copper Group. The company now holds 50.01% equity of Diqing nonferrous metals and plans to acquire 38.23% equity of Diqing nonferrous metals held by the controlling shareholder through fixed increase. The metal output of Diqing nonferrous copper mine accounted for 71.43% of the listed company, and the copper output of the mine accounted for 64.6% of the consolidated output of the company in 2021. In 2021, the net profit of Diqing nonferrous metals was 960 million yuan. The company acquired 38.23% equity of Diqing nonferrous metals through this non-public offering, which will further increase the net profit attributable to the parent company and improve the profitability of the company.
The supply of copper concentrate tends to be loose, and the processing fee increases, thickening the smelting profit of the company. The long single processing fee of copper concentrate in 2022 is 65 US dollars / ton, an increase of 5.5 US dollars / ton over 2021. Cspt has determined that the processing fee of copper concentrate procurement guidance in the second quarter of 2022 is $80 / ton, an increase of $10 / ton compared with the first quarter. The increase of processing fee will significantly increase the company’s smelting profit.
Risk tip: the copper output of the mine decreased, and the processing fee of copper concentrate was lower than expected.
Investment suggestion: maintain the “overweight” rating.
Maintain the “overweight” rating. Assuming that the spot price of copper including tax from 2022 to 2024 is 70000 yuan / ton, the long single TC of copper concentrate is 65 / 75 / 75 dollars / ton, the price of sulfuric acid is 500 yuan / ton, the price of gold is 400 yuan / g, and the price of silver is 5000 yuan / kg, the net profit attributable to the parent company is expected to be 1.202/13.181357 billion yuan from 2022 to 2024, with a year-on-year increase of 85.1/9.7/3.0%; Diluted EPS = 0.71/0.78/0.80 yuan, and the current share price corresponds to PE = 15.8/14.4/14x. The company’s asset quality will be further improved after the provision for asset impairment of old and weak mines. After the implementation of fixed increase projects, the production capacity of equity copper concentrate will increase. The smelting link will benefit from the upward trend of copper concentrate processing fees and maintain the “overweight” rating.
