\u3000\u3 Jointo Energy Investment Co.Ltd.Hebei(000600) 929 Snowsky Salt Industry Group Co.Ltd(600929) )
Event: the company issued the announcement of pre increase of performance in the first quarter of 2022. It is estimated that the net profit attributable to the shareholders of the listed company will be 140150 million yuan in 2022q1, an increase of 92-102 million yuan compared with the same period of last year (legal disclosure standard), with a year-on-year increase of 193% – 214%; Compared with the same period of last year (after restatement), it increased by 84-94 million yuan, a year-on-year increase of 148% – 166%.
Since 2022, the soda ash industry has maintained a high boom. In 2022, chemical products still maintain a high outlook, and the price of soda ash still returns to the level of 3000 yuan / ton after the upstream and downstream game. On the one hand, the operating rate of the industry remains high and the room for improvement is limited; On the other hand, the downstream photovoltaic glass production capacity is actively put into operation, which continues to drive the demand for soda ash. In the field of traditional demand, although the growth rate of completed real estate investment is in a downward trend, with the relaxation of government regulation on the real estate industry, the downstream construction demand is supported. The ammonium chloride market showed a decline first and then rise, and the price reached a new high in recent years. It is mainly affected by the slight tension at the supply side. It is expected that the price of ammonium chloride can still remain high in the second quarter. The company’s Xiangyu salt chemical has an annual production capacity of 1 million tons of well mineral salt, 700000 tons of soda ash and 700000 tons of ammonium chloride. In 2022, these production capacities will continue to enjoy the rich profits and abundant cash flow brought by the high prosperity of soda ash industry, providing a strong financial guarantee for the expansion of other businesses of the company.
The strategy of high-end edible salt has been steadily promoted. At the end of April 2021, the company launched high-end small package salt loose 997 series products to promote the high-end strategy of edible salt to a new stage. At present, loose 997 has a good dynamic sales situation in the provincial market with prominent brand and channel advantages. The markets outside the province actively promote investment and distribution. At present, it has basically completed the coverage of the national market. In 2021, the sales volume of loose 997 series products was about 4000 tons, and the planned capacity has not been fully utilized. This year, the company continued to firmly implement the strategy of high-end salt. At present, the company has reserved a relatively rich matrix of high-end salt products, and actively expanded markets and online channels outside the province. In addition, the company is ahead of the industry in brand publicity and consumer education, and the brand popularity and influence of Xuetian salt continue to improve. With the continuous deepening of the market in the province, the further opening of markets outside the province and the gradual improvement of the construction of emerging channels, the sales volume of medium and high-end products is expected to be greatly improved, so as to push up the ton price of salt, enhance profitability and contribute to performance flexibility.
Salt cave resources have broad development space. The comprehensive utilization and development of salt caverns is a development direction supported by the state and focused by the industry. At present, China Salt Group has done relevant experimental projects in the industry and has successfully operated in 2021. The company also has good resources. It has four well mineral salt enterprises with large scale and long mining time. Therefore, it has rich salt cave resources. For example, Xiangheng salt chemical, a subsidiary of the company, was built in 1969. At present, its annual production capacity has reached more than 2.6 million tons, and its annual new salt cave space is still increasing. The comprehensive utilization and development of Hengyang salt cave has also been listed in the key planning project of the 14th five year plan of Hunan Province, and the government supports and promotes the project. At present, the company is planning to comprehensively utilize and develop its salt cave resources, which is expected to contribute to performance increment in the future.
Profit forecast and investment suggestions: it is estimated that the operating revenue of the company from 2021 to 2023 will be RMB 4.79/5.27/6.07 billion respectively, the attributable net profit will be RMB 4.0/5.6/58 billion respectively, and the corresponding EPS will be RMB 0.30/0.42/0.43 respectively. The company is a leading enterprise in the industry in the transformation of medium and high-end edible salt. The sunk cost in the early stage has affected the current performance level. In the future, the development of medium and high-end edible salt market will provide the company with high profit elasticity. It is estimated that the salt business will contribute about 160 million profits in 22 years, giving the company 34-38 times PE in 22 years; It is estimated that the chemical business will contribute about 400 million profit in 22 years. Considering the strong profitability and anti risk ability of the company’s chemical business, the chemical business will be given 10-12 times PE in 22 years, and the target market value range of 9.4-10.9 billion will be given for the two parts of business, with the corresponding reasonable range of stock price of 7.0-8.1 yuan / share, maintaining the rating of “prudent recommendation”.
Risk tip: the boom of chlor alkali industry is at a downward risk; The promotion of medium and high-end edible salt products is less than expected; The channel construction was not as expected.
