\u3000\u3 Jointo Energy Investment Co.Ltd.Hebei(000600) 456 Baoji Titanium Industry Co.Ltd(600456) )
Event overview: on March 31, the company released the 2021 performance express and the announcement of 22q1 performance advance: it is expected to realize the net profit attributable to the parent company of 560 million yuan in 2021, a year-on-year increase of + 54.59%, the net profit attributable to the parent company of 180 million to 205 million yuan in 22q1, a year-on-year increase of + 87.00% to 112.97%, and a month-on-month increase of + 102.14% to + 130.22%. 22q1 realized a net profit of 179 million yuan to 204 million yuan after non deduction, with a year-on-year increase of + 94.97% to + 121.94% and a month on month increase of + 134.26% to + 166.97%.
Analysis and judgment:
The titanium industry maintains a high outlook, and the company’s titanium materials are gradually in large quantities. In terms of price, the 22q1 titanium industry maintained a high outlook, and the price of titanium materials remained relatively high. The average market price of 22q1 titanium sector was + 2.4% year-on-year and – 6.1% month on month. However, since the middle and late February, the price of titanium sector has entered the upward channel again. The average price of titanium sector in March increased by 8.7% month on month compared with February, approaching the high price of last year. In terms of sales volume, the company has made every effort to expand market demand, continuously improved operation quality and efficiency, and gradually increased the volume of titanium products. It is expected that the sales volume of 22q1 titanium materials of the company will rise year-on-year. Compared with 21q4, due to the impact of Xi’an epidemic on the company’s titanium sales in the fourth quarter of last year, the sales volume of 22q1 is also expected to increase significantly month on month.
The company is the leader of titanium materials in China and plans to become a strong enterprise in the international titanium industry in the 14th five year plan. The company is a high-tech enterprise engaged in the R & D, production and sales of titanium and titanium alloy products. It has a complete set of processing and production systems from sponge titanium, melting and casting, forging to sectors, tubes and rods. The titanium industry chain is relatively perfect. The annual output of titanium materials of the company ranks first in China, and it is one of the most important suppliers of titanium materials for aviation and aerospace in China. By the end of 2020, the company’s design capacity of sponge titanium is 10000 tons / year, the design capacity of titanium ingot is 25000 tons / year, and the design capacity of titanium materials is 20000 tons / year. The company’s “14th five year plan” development strategy plans to reach the production capacity of 50000 tons of titanium products and a certain amount of zirconium, nickel and other metal products, consolidate and enhance the leading role of the industry, and is expected to build a strong enterprise in the international titanium industry.
The high-end titanium material project has been put into operation gradually, and the structure of titanium products has been continuously optimized. At the beginning of 2021, the company successfully completed the non-public offering of shares, raising a net fund of 1.968 billion yuan, which effectively guaranteed the smooth implementation of the titanium project invested by raising funds. (1) Aerospace wide width titanium alloy sector and strip foil project is expected to increase production by 1500 tons / year of sector, 5000 tons / year of titanium strip and 500 tons / year of foil; (2) The project of high-quality titanium ingots, pipes and profiles is expected to increase the production of titanium ingots by 10000 tons / year, pipes by 290 tons / year and titanium alloy profiles by 100 tons / year; It is expected that the titanium material project will be gradually put into operation in 2022, and the titanium product structure of the company is expected to be further optimized at that time.
The production of sponge titanium and zirconium tetrachloride was expanded, and the self-sufficiency rate of raw materials of the company was improved. The expansion project with an annual output of 12000 tons of sponge titanium and 3000 tons of zirconium tetrachloride has been gradually promoted. By the first half of 2021, the project progress has been 59.6%. With the gradual completion and operation of sponge titanium production capacity, the self-sufficiency rate of raw materials of the company has been improved to ensure the stability of the company’s performance.
Investment suggestion: benefiting from the development of downstream fields such as aerospace and ocean engineering, the company has broad demand for titanium materials. With the production of high-end titanium products, the company’s profitability is expected to continue to increase. We expect that the net profit attributable to the parent company from 2021 to 2023 will be 560 / 781 / 1053 million yuan, corresponding to the closing price of 52.02 yuan on March 31, 2022, and the PE will be 46 / 33 / 25 times from 2021 to 2023, maintaining the “recommended” rating of the company.
Risk warning: downstream demand is less than expected; The price rise of raw materials exceeded expectations; The project is not progressing as expected.
