\u3000\u3 Jointo Energy Investment Co.Ltd.Hebei(000600) 010 Inner Mongolia Baotou Steel Union Co.Ltd(600010) )
Events
The company released its 2021 annual report on the evening of April 14, with a revenue of 86.183 billion yuan in 2021, a year-on-year increase of 45.42%; The net profit attributable to the parent company was 2.866 billion yuan, a year-on-year increase of 606.09%; The net profit deducted from non parent company was 2.861 billion yuan, with a year-on-year increase of 520.54%; EPS is 0.0631 yuan.
Commentary
Q4 steel price decline led to loss of steel business. The net profit attributable to the parent company of Q4 company in 21 years lost 911 million yuan, which was mainly due to factors such as limited production of steel + rising price of raw materials, and the steel price fell sharply. In 21 years, the company produced 15.059 million tons of iron, with a year-on-year increase of 73300 tons; Steel production was 164473 million tons, an increase of 836700 tons year-on-year; The production of commodity blank materials was 154457 million tons, with a year-on-year increase of 760700 tons; Production of 170400 tons of rare earth concentrate; The production of fluorite is 100500 tons. In 22 years, the company aims to produce 14.7 million tons of iron, 16.4 million tons of steel and 15.48 million tons of commodity billets, with a record low ratio of iron to steel; 160000 tons of rare earth concentrate and 300000 tons of fluorite were produced, and a new breakthrough was made in the comprehensive utilization of Bayan Obo resources.
The agreement price has been raised in 22 years, and the performance of rare earth is expected to continue to increase. In January, the company renewed the rare earth concentrate supply contract with China Northern Rare Earth (Group) High-Tech Co.Ltd(600111) and the transaction price in 22 years was adjusted to 26887 yuan / ton excluding tax, with a price increase of 106182 yuan per ton, a range of more than 65%. The price of rare earth is expected to remain high in 22 years. The company uses rare earth tailings resources to develop at a low cost. It is expected that the profit per ton in 22 years will exceed 20000 yuan per ton. According to the target of 160000 tons of concentrate produced by the company in 22 years, the profit of the company’s rare earth business in 22 years is expected to exceed 3.5 billion, with a year-on-year increase of more than 50%.
Steel is expected to benefit from steady growth market expectations. Real estate and infrastructure grew steadily, and there was marginal room for improvement in demand in the second quarter, supporting the upward rise of steel prices. At present, the company has formed an annual iron, steel and material distribution capacity of 17.5 million tons, and has the production capacity of high-grade automobile steel, high-grade household appliance steel, high-grade pipeline steel, high-strength structural steel and so on. The company continued to promote cost reduction and efficiency increase. In 21 years, the manufacturing cost of per ton steel process was reduced by 150.15 yuan / ton, a year-on-year decrease of 5%; Controllable expenses and economic and technical indicators reduced the cost by 1.593 billion yuan.
Profit forecast & investment suggestions
According to the company’s performance in 21 years, the net profit attributable to the parent company in 22-23 years is reduced by 48% and 38% respectively. It is expected that the net profit attributable to the parent company in 22-24 years will be 3.996 billion yuan, 4.862 billion yuan and 5.349 billion yuan respectively, corresponding to EPS of 0.09 yuan and 0.12 yuan respectively, and PE of 25 times, 21 times and 19 times respectively, maintaining the “buy” rating.
Risk tips
Risk of profit decline in iron and steel business; Downstream demand is lower than expected.
