\u3000\u3 Jointo Energy Investment Co.Ltd.Hebei(000600) 295 Inner Mongolia Eerduosi Resources Co.Ltd(600295) )
Event: the company released its 2021 annual report. The company achieved an annual revenue of 36.5 billion yuan, a year-on-year increase of 58%; The net profit attributable to the parent company was 6.1 billion yuan, a year-on-year increase of 299%; At the same time, the company announced the profit distribution plan, distributed a cash dividend of 2 yuan (including tax) per share, and converted the capital reserve into 0.4 shares of share capital.
Comments:
Strong performance, high dividend and high-quality blue chip. The net profit attributable to the parent company increased significantly in 2021, and has achieved continuous growth from 2016 to 2021, with a CAGR of 70% in six years; And it is a rare enterprise in the industry, with growth in 2021q4. The company’s total cash dividend in 2021 was 2.86 billion yuan, with a dividend ratio of 47%; Based on the share price on April 14, 2022, the dividend yield is as high as 6%. Since its listing, the company has paid dividends every year, with an average dividend ratio of more than 20%.
Ferrosilicon business shows high flexibility. In 2021, the company’s ferrosilicon business revenue increased by 51% year-on-year, the gross profit margin increased by 11 PCT year-on-year, and the gross profit increased by 96%. As the world’s largest supplier of ferrosilicon, the company has a ferrosilicon production capacity of 1.6 million tons / year, and is expected to fully enjoy high elasticity in the ferrosilicon industry.
Ferrosilicon industry: hard gap, continued bullish. As of April 14, 2022, the price of ferrosilicon futures rose to 10456 yuan / ton, an increase of 26% over the beginning of the year; At the same time, with the sharp decline of inventory, the social inventory of ferrosilicon fell by 50% year-on-year at the end of March 2022. 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 steel mills on the demand side will gradually resume production. 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.
Invest in capacity replacement projects. The company plans to invest 2.5 billion yuan and 450 million yuan respectively with its own funds to invest in the construction of ferrosilicon alloy innovation project and homologous chemical calcium carbide project; This replacement is a reduction replacement. After replacement, the annual capacity of the siliceous iron ore hot furnace is 461200 tons and the annual capacity of the closed calcium carbide furnace is 232100 tons. The above two projects are expected to be completed and put into operation by the end of 2023. We believe that the above two projects will effectively improve the production efficiency of the company.
Coal can be supplied by itself, and the resource attribute is obvious. In 2021, the company added 25% equity of Yong Coal Mining Co., Ltd., and the company controlled a total coal equity production capacity of nearly 11 million tons, which can basically realize self supply of coal. When the coal price probability remains high, the profitability of the company will be fully guaranteed.
Profit forecast and investment rating: we predict that the company’s revenue from 2022 to 2024 will be 45 / 490 / 46 billion yuan, with a year-on-year growth rate of 23% / 9% / – 6%; Considering the continuous price rise of ferrosilicon, we raised the net profit attributable to the parent company from 6.8/6 billion yuan to 9 / 10 billion yuan from 2022 to 2023, that is, the net profit attributable to the parent company from 2022 to 2024 was 9 / 10 / 9.5 billion yuan, with a year-on-year growth rate of 48% / 11% / – 5%; The corresponding PE is 5.2 / 4.7 / 4.9x respectively. Considering the substantial increase of the company’s performance, low valuation and high dividend, the “buy” rating of the company is maintained.
Risk warning: price fluctuation of ferrosilicon; Cost fluctuation; The company’s own business risks.
