\u3000\u3 Jointo Energy Investment Co.Ltd.Hebei(000600) 295 Inner Mongolia Eerduosi Resources Co.Ltd(600295) )
Key investment points
High quality ferroalloy faucet Inner Mongolia Eerduosi Resources Co.Ltd(600295) founded in 1979, it is the world’s largest ferrosilicon producer and distributor. 1) Ferroalloy business: with 1.6 million T / a ferrosilicon production capacity and 400000 T / a silicon manganese alloy production capacity, it is the largest ferrosilicon supplier in China; In 2020, the company will produce 1.47 million tons of ferrosilicon and 370000 tons of silicon manganese alloy. 2) PVC business: the company’s PVC production capacity is 800000 tons, and the scale can not be underestimated; 3) Cashmere business: the company has been deeply engaged in cashmere industry for 40 years and is a world-famous brand.
Ferrosilicon industry: hard gap, continued bullish. As of April 2, 2022, the current price of ferrosilicon has risen to a high level of 10000 yuan / ton; At the same time, with the sharp decline of inventory, the social inventory of ferrosilicon was only 43000 tons at the end of March 2022, a year-on-year decline of 50%. We believe that behind it is the rapid improvement of industry supply and demand: 1) the conflict between Russia and Ukraine led to the gap between global ferrosilicon supply and demand in the past month, which led to the growth of China’s ferrosilicon export. From January to February, ferrosilicon export increased by more than 100%; 2) The output of the demand side steel plant gradually resumed production, returning to 2.67 million tons / day in February. Based on the horizontal control of steel output throughout the year and the bottleneck of ferrosilicon monthly output returning to more than 500000 tons, we judge that the subsequent supply and demand gap is still obvious or even further expanded, and the price of ferrosilicon will further strengthen.
Coal can be supplied by itself, and the resource attribute is obvious. In 2020, the company will produce 4.6 million tons of raw coal and reserve about 200 million tons. In 2021, the company added 25% equity of Yong Coal Mining Co., Ltd. through this acquisition, the company controlled a total coal equity production capacity of nearly 11 million tons, which can basically realize self supply of coal. Considering that the coal price probability remains high, the company can reduce the fuel cost by completely supplying coal, or it is expected to improve its profitability by exporting self-produced high calorific value coal and purchasing low calorific value coal.
Strong performance, high dividend and high-quality blue chip. The company’s performance has achieved six years of continuous growth, and the compound annual growth rate of net profit attributable to the parent company has reached 45%, of which the year-on-year growth rate in 2021 is expected to be 300%. Since its listing, the company has paid cash dividends every year, with a cumulative dividend amount of 3.8 billion; The dividend ratio and dividend rate are high. In 2020, the dividend ratio is about 70% and the dividend rate is 4.58%, which is leading in the sector. The company’s high dividend has become a feature and is sustainable.
Profit forecast and investment rating: considering the upward price of the company’s main products, we expect the company’s revenue to be 36.4/40/36.5 billion yuan from 2021 to 2023, with a year-on-year growth rate of 57% / 10% / – 9%; The net profit attributable to the parent company was 61 / 68 / 6 billion yuan, with a year-on-year growth rate of 300% / 11% / – 11%; The corresponding PE is 7.0 / 6.3 / 7.1x respectively. According to the business segment, we select Hbis Resources Co.Ltd(000923) , Fangda Carbon New Material Co.Ltd(600516) , Shanghai Chlor-Alkali Chemical Co.Ltd(600618) and Xinjiang Zhongtai Chenical Co.Ltd(002092) , Yibin Tianyuan Group Co.Ltd(002386) , and Hla Group Corp.Ltd(600398) , Ningbo Peacebird Fashion Co.Ltd(603877) , which also belong to the well-known trademark of clothing, for the ferroalloy segment, and the average PE from 2022 to 2023 is 9.1/7.2x; The company’s valuation is lower than that of comparable companies. Considering the steady development of the company’s electro metallurgy sector and clothing sector, the company was given a “buy” rating for the first time.
Risk warning: price fluctuation of ferrosilicon; Cost fluctuation; The company’s own business risks.
