\u3000\u3 Guangdong Shaoneng Group Co.Ltd(000601) 618 Metallurgical Corporation Of China Ltd(601618) )
Key investment points
Event: the company released] the annual report of 2021. In 2021, the annual operating revenue reached 500.57 billion yuan, with a year-on-year increase of 25.1%; The net profit attributable to the parent company was 8.37 billion yuan, an increase of 6.5% year-on-year, and the basic eps0.5% was realized 35 yuan.
The growth rate of engineering business was strong, and the mineral business increased significantly. In 2021, the company achieved an operating revenue of 500.57 billion yuan, a year-on-year increase of 25.1%, a year-on-year increase of 7pp, the highest growth level in recent ten years, and realized a net profit attributable to the parent company of 8.37 billion yuan, a year-on-year increase of 6.5%. In terms of business, the company’s engineering business revenue in 2021 reached 462.29 billion yuan, with a year-on-year increase of 27.0%, mainly contributed by the year-on-year increase of 38.3% and 27.4% of housing construction and metallurgical engineering; Affected by the macro environment, the real estate development business had a revenue of 21.42 billion yuan, a year-on-year decrease of 11.2%; The resource development business performed well, benefiting from the global bulk price rise and the company’s strategy of fast digging, fast selling, full production and full sales, with a revenue of 6.67 billion yuan, a year-on-year increase of 52.1%.
In the fourth quarter, the company achieved a revenue of 151.08 billion yuan, an increase of 14.3% over the same period last year; The net profit attributable to the parent company was 2.25 billion yuan, a year-on-year decrease of 31.0%. Quarterly, the company achieved revenue and growth rate of 94.42 billion yuan (+ 29.8%), 156.58 billion yuan (+ 45.2%), 98.48 billion yuan (+ 12.7%) and 151.08 billion yuan (+ 14.3%) in Q1 / Q2 / Q3 / Q4 in 2021.
The effect of expense control is obvious, and the net profit is dragged down by accrual. In 2021, the company’s comprehensive gross profit margin was 10.62%, with a year-on-year decrease of 0.7pp, which was mainly affected by the increase of material cost and labor cost at the engineering end and the increasingly fierce bidding competition in the metallurgical field. In terms of business, except that the old interest rate of the project decreased by 0.98pp due to the above reasons, the gross profit rate of other businesses increased. In particular, the mineral development business benefited from the sharp rise in the price of copper, nickel and other mineral products and the company’s cost reduction and efficiency improvement measures. The gross profit rate was 42.67%, up 14.43pp year-on-year. The company’s expense rate during the period was 6.12%, a decrease of 0.76pp compared with the previous year. The main reason for the decrease of management expenses and financial expenses compared with the previous year is that the company’s one-time withdrawal of retiree expenses and the company’s overall arrangement of interest bearing liabilities made the capital cost lower, and the rate of sales and R & D expenses was roughly the same as that of the previous year. The net interest rate was 1.7%, with a year-on-year decrease of 0.3pp, which was mainly due to the impact of the current real estate industry. The company used the individually recognized accrual method to withdraw part of the impairment. The impairment of assets and credit totaled 5.34 billion yuan, an increase of 1.66 billion yuan over the same period last year. In addition, the profit and loss of minority shareholders increased by 1.71 billion yuan.
The sustained high growth of orders laid the cornerstone of performance, and both engineering and mineral businesses made breakthroughs. In 2021, the company signed contracts of 1.2 trillion yuan, with a year-on-year increase of 18.1%, of which the newly signed contract amount of metallurgical engineering was 157.79 billion yuan, with a year-on-year increase of 10.0%, and the contract amount of other engineering was 100297 billion yuan, with a year-on-year increase of 20.1%. From January to February in 2022, the newly signed contracts amounted to 208.63 billion yuan, with a year-on-year increase of 14.6%. The newly signed project contract amount of the company continued to maintain a high growth, laying a foundation for the continuous release of the company’s future performance. In addition, affected by geopolitics and supply and demand, the price of nickel, copper, zinc and lead in the metal market continues to rise, and the company’s mining projects in Papua New Guinea and Pakistan continue to contribute high profits. With the political stability of Afghanistan, the company’s early inak copper mine project is expected to resume production. The company plans to achieve an operating revenue of 550 billion yuan and a newly signed contract amount of 1.25 trillion yuan in 2022.
Profit forecast and investment suggestions. It is estimated that the company’s EPS from 2022 to 2024 will be 0.46 yuan, 0.53 yuan and 0.61 yuan respectively, with a compound growth rate of 15%, and the corresponding PE will be 8, 7 and 6 times respectively. Give the company the performance pe10 in 2022 Three times of comparable valuation, corresponding to the target price of 4.74 yuan, with a “buy” rating for the first time.
Risk tips: macroeconomic downside risk, overseas geopolitics and metal price fluctuation risk.
