\u3000\u3 Jointo Energy Investment Co.Ltd.Hebei(000600) 456 Baoji Titanium Industry Co.Ltd(600456) )
Event overview: the company released its 2021 annual report: in 2021, the company achieved a revenue of 5.246 billion yuan, a year-on-year increase of 20.9%; The net profit attributable to the parent company was 560 million yuan, a year-on-year increase of 54.5%; Net profit deducted from non parent company was 514 million yuan, with a year-on-year increase of 61.3%. Quarter by quarter, in 2021q4, the company achieved a revenue of 631 million yuan, a year-on-year decrease of 44.5% and a month on month decrease of 64.5%; The net profit attributable to the parent company was 89 million yuan, a year-on-year decrease of 26.5% and a month on month decrease of 53.9%; Net profit deducted from non parent company was 76 million yuan, a year-on-year decrease of 20.9% and a month on month decrease of 58.5%.
Comments:
① volume: in 2021, the sales volume of titanium products increased by 41.46% year-on-year. The company’s titanium products are gradually in large quantities. In 2021, the sales volume of titanium products was 26600 tons, a year-on-year increase of + 41.46%. Among them, the sales volume of titanium materials was 20900 tons, a year-on-year increase of + 48.90%; The sales volume of other titanium products (titanium ingot, sponge titanium, etc.) was 5700 tons, a year-on-year increase of + 19.60%. Quarter by quarter, the sales of titanium products of 21q4 company were affected by the Xi’an epidemic, and the sales volume of titanium products of 21q4 was – 9.95% month on month.
② price: the price of sponge titanium increased greatly. The sales volume of superimposed 21q4 was affected by the epidemic, and the gross profit margin of the company decreased by 0.99pct to 23.27%. The titanium industry maintained a high outlook. The average market price of titanium sector in 2021 was + 15.67% year-on-year, but the price trend of sponge titanium, the main raw material, was relatively stronger. The average price of sponge titanium in 2021 was + 16.49% year-on-year. In 2021, the gross profit margin of the company decreased by 0.99pct to 23.27%. Quarterly, the average price of 21q4 titanium sector increased by 2.34% month on month compared with Q3. Due to the sharp decline in Q4 sales, 21q4 gross profit was – 121 million yuan month on month, dragging down 21q4 performance.
Future core focus:
① the company is the leader of titanium materials in China. It is planned to become a strong enterprise in the international titanium industry in the 14th five year plan. The annual output of titanium materials of the company ranks first in China, and it is one of the main suppliers of titanium materials for China’s aviation and aerospace exports. The actual production capacity of titanium processed materials reaches 30938 tons in 2021. The company’s “14th five year plan” development strategy plans to reach the production capacity of 50000 tons of titanium products and a certain amount of zirconium, nickel and other metal products, consolidate and enhance the leading role of the industry, and is expected to build a strong enterprise in the international titanium industry.
② the high-end titanium material project is gradually put into operation, and the structure of titanium products is continuously optimized. At the beginning of 2021, the company successfully completed the non-public offering of shares, raising a net amount of 1.968 billion yuan to ensure the smooth implementation of the titanium project invested by raising funds. (1) Aerospace wide width titanium alloy sector and strip foil project is expected to increase production by 1500 tons / year of sector, 5000 tons / year of titanium strip and 500 tons / year of foil; (2) The project of high-quality titanium ingots, pipes and profiles is expected to increase the production of titanium ingots by 10000 tons / year, pipes by 290 tons / year and titanium alloy profiles by 100 tons / year; As the titanium material project is gradually put into operation, the titanium product structure of the company will be further optimized at that time.
③ the production of sponge titanium and zirconium tetrachloride was expanded, and the self-sufficiency rate of raw materials of the company was improved. The expansion project with an annual output of 12000 tons of sponge titanium and 3000 tons of zirconium tetrachloride has been gradually promoted. By the end of 2021, the completion progress of the project is 90%. With the gradual completion and operation of sponge titanium production capacity, the self-sufficiency rate of raw materials of the company has been improved to ensure the stability of the company’s performance.
Investment suggestion: benefiting from the development of aerospace, marine engineering and other downstream fields, the company has broad demand space for titanium materials. With the production of high-end titanium products, the company’s performance can be released. We expect that the net profit attributable to the parent company from 2022 to 2024 will be RMB 788 / 1057 / 1389 million, corresponding to the closing price of RMB 48.06 on April 15, 2022, and the PE will be 29 / 22 / 17 times from 2022 to 2024, maintaining the “recommended” rating of the company.
Risk warning: downstream demand is less than expected; Price fluctuation risk of raw materials; The project is not progressing as expected.
