\u3000\u30 China Baoan Group Co.Ltd(000009) 33 Henan Shenhuo Coal&Power Co.Ltd(000933) )
Key investment points
Event: Henan Shenhuo Coal&Power Co.Ltd(000933) released the annual report of 2021. During the reporting period, the company achieved an operating revenue of 34.452 billion, a year-on-year increase of 83.16%, a net profit attributable to the parent company of 3.234 billion, a year-on-year increase of 802.57%, deducting a net profit not attributable to the parent company of 3.488 billion, a year-on-year increase of 390391%; In Q4 of 21 years, the operating revenue was 9.631 billion, a year-on-year increase of 124.50%, a month on month increase of 3.46%, and the net profit attributable to the parent company was 935 million, a year-on-year increase of 795.44% and a month on month increase of 11.80%.
During the reporting period, benefiting from the high boom of coal and aluminum industries, the volume and price of the company's main products increased simultaneously, which promoted the high growth of the company's performance.
In terms of coal, the company produces 6.5373 million tons of coal (YoY + 16.93%), and the sales volume is 6.5449 million tons (YoY + 13.92%), including 60700 tons of formed coke (YoY + 10.16%) and 73500 tons (YoY + 28.05%). The company's main coal products are anthracite and lean coal. In 2021, the average mining price of anthracite produced in Yongcheng was 157568 yuan / ton (YoY + 45.43%), and the average market price of lean coal in Henan was 149482 yuan / ton (YoY + 66.66%).
In terms of electrolytic aluminum, the company produces 1.4066 million tons of aluminum products (YoY + 37.52%), with sales of 1.4176 million tons (YoY + 40.33%), 54100 tons of aluminum foil (YoY + 102.45%), 59700 tons (YoY + 69.12%), 566000 tons of anode carbon blocks (YoY + 17.43%) and 554700 tons (YoY + 25.93%). Since sunshine aluminum, the subsidiary of the company, is no longer included in the consolidation scope since March 2021, the output of cold rolled coil of the company in 2021 is 9600 tons (yoy-84.52%), and the sales volume is 8700 tons (yoy-86.23%). In 2021, under the influence of the capacity red line and the dual control policy of energy consumption, the overall supply and demand of the aluminum industry was tight, the prosperity of the industry increased, and the aluminum price continued to be high. During the reporting period, the average price of Changjiang nonferrous A00 aluminum ingot was 1889811 yuan / ton (YoY + 33.18%).
The reconstruction and expansion project of Liangbei Coal Mine has been actively promoted, and the Yunnan Shenhuo electrolytic aluminum project is expected to be put into operation by the end of April. During the reporting period, the reconstruction and expansion of Liangbei Coal Mine was actively promoted. At present, it has passed the completion site acceptance, and the first mining face has entered the state of joint test run. After the reconstruction and expansion project is completed, the annual production capacity of Liangbei Coal Mine will increase from 900000 tons to 2.4 million tons. Due to the large amount of water and abundant hydropower supply in the dry season of 2022 in Yunnan Province, according to the company's announcement, since February 2, Yunnan power grid has implemented an orderly restoration of power supply to electrolytic aluminum enterprises in Yunnan Province. The 220000 ton production capacity of Yunnan Shenhuo has been started one after another. It is expected that the 900000 ton production capacity of Yunnan Shenhuo will be fully put into operation at the end of April, raising the company's electrolytic aluminum production in 22 years.
Aluminum foil business increases the added value of overall products and opens up new growth space. During the reporting period, the subsidiary Shenlong Baoding high-end double zero foil phase I was put into operation with 55000 tons. In addition, the company completed the development and research of aa1070 and AA1235 new energy battery aluminum foil products in 2021. In 2022, the company accelerated the production and construction of new energy power battery materials with an annual output of 60000 tons in phase II. It is expected to cut into the field of new energy materials and open up new growth space for the company in the future.
Impairment affects short-term performance and is conducive to the improvement of the company's asset quality in the long run. During the reporting period, affected by environmental protection, safe production, natural disasters, policies and other factors, the company's subsidiaries such as damoling coal mine, Shenhuo power generation and Shenhuo railway Huiyuan aluminum industry accrued assets and credit impairment reserves of 3.587 billion yuan, accounting for 70.67% of the total profit, which affected the company's performance in the short term, but helped to improve the company's asset quality in the long run.
It is still difficult to change the tense pattern of supply and demand when China's electrolytic aluminum is resumed production and put into operation. It is expected that the aluminum price will continue to be high under the support of low inventory. On the supply side, although the resumption of electrolytic aluminum production and the acceleration of production in China have increased the output of electrolytic aluminum in China, the stability of overseas electrolytic aluminum production will be further impacted by the geopolitical tension in the early stage, and the output of overseas electrolytic aluminum will be affected to a certain extent; On the demand side, the Federal Reserve has started the cycle of raising interest rates and shrinking the balance sheet. The high falling trend of overseas economy has been established, which has dragged down the overseas demand for electrolytic aluminum, while China's demand still needs further efforts of the steady growth policy. We expect the growth rate of global electrolytic aluminum demand to fall in 2022. On the whole, according to our calculation, the tight supply and demand pattern of global electrolytic aluminum in 2022 is still difficult to change, and the aluminum price will continue to be high under the support of low inventory.
Profit forecast and investment suggestions: we expect that under the dual wheel drive of coal and aluminum, the overall profitability of the company will remain high, and the aluminum foil business will open up new growth space. It is estimated that the company's electrolytic aluminum output will be 160 / 168 / 1.7 million tons and the output of coal and formed coke will be 660 / 666 / 6.73 million tons in 22-24 years. We raise the aluminum price assumption. The aluminum price in 22-24 years will be RMB 2.0/2.121000/ton, and the net profit attributable to the parent company in 22-24 years will be RMB 5.39059166079 billion respectively (it is estimated that RMB 4.291/4.505 billion respectively in the previous 22-23 years), corresponding to PE in 22-24 years will be 6 / 5 / 5x respectively. Maintain the company's "buy" rating.
Risk warning event: macroeconomic fluctuation exceeds the expected risk; The risk of weak aluminum demand and declining profits; The risk of industrial policy changes exceeding expectations; Risk of raw material price fluctuation exceeding expectations; The risk that the construction of projects under construction is slower than expected; Uncertainty risk of acquisition project; Repeated epidemic risk, etc.
