\u3000\u3 Jointo Energy Investment Co.Ltd.Hebei(000600) 111 China Northern Rare Earth (Group) High-Tech Co.Ltd(600111) )
Event: on April 14, 2022, the company released its 2021 annual report: in 2021, the company achieved a revenue of 30.408 billion yuan, a year-on-year increase of 43.1%; The net profit attributable to the parent company was 5.13 billion yuan, a year-on-year increase of 516.1%; Net profit deducted from non parent company was 4.967 billion yuan, with a year-on-year increase of 516.4%. In 2021q4, the company achieved a revenue of 6.317 billion yuan, a year-on-year increase of 10.5% and a month on month decrease of 32.6%; The net profit attributable to the parent company was 1.981 billion yuan, with a year-on-year increase of 510% and a month on month increase of 77.9%; Net profit deducted from non parent company was 2.008 billion yuan, with a year-on-year increase of 490.3% and a month on month increase of 94.6%. The performance is in line with the previous performance pre increase announcement.
The year-on-year increase in net profit attributable to the parent company may be due to the simultaneous rise in the volume and price of main products during the reporting period. ① Production and sales volume: the production and sales volume of rare earth products increased year-on-year. Thanks to the substantial growth of rare earth indicators (mineral products / smelting separation indicators increased by 36.44% and 40.53% respectively year-on-year), the company’s rare earth oxide output increased by 19.7% to 12675 tons year-on-year in 2021, and the sales volume increased by 95.6% to 42105 tons year-on-year. The sales growth of rare earth oxides is much greater than that of output, and there are more inventory sales. Therefore, the inventory of rare earth oxides decreased by 32.5% year-on-year to 61109 tons. ② Price: benefiting from the growth of downstream demand, the supply of rare earth products is in short supply, and the price rose during the year. The annual average price of praseodymium neodymium oxide reached 591000 yuan in 2021, with a year-on-year increase of 90.64%. ③ Cost: after negotiation between the company and Inner Mongolia Baotou Steel Union Co.Ltd(600010) in 2021, the price excluding tax of rare earth concentrate was 16269 yuan / ton (dry weight, REO = 51%), with a year-on-year increase of 29.12%, which was far less than the increase in the price of light and heavy rare earth oxides.
The increase in the net profit attributable to the parent company in 2021q4 was mainly due to the increase in gross profit (+ 1.082 billion yuan), which was mainly benefited from the increase in the volume and price of rare earth products. ① Production and sales volume: in 2021q4, the company’s rare earth oxide sales volume increased by 69.25% to 13499 tons month on month, and the output decreased by 64.06% to 1202 tons month on month. The sales volume significantly exceeds the output or reflects that the company is mainly selling inventory in the fourth quarter. ② Price: the average Q4 price of praseodymium neodymium oxide reached 773700 yuan in 2021, with a year-on-year increase of 107% and a month on month increase of 31.1%.
As a leading enterprise in the rare earth industry, the company has many highlights: ① among the first batch of indicators in 2022, the smelting separation product index of China Northern Rare Earth (Group) High-Tech Co.Ltd(600111) increased by 40.53% year-on-year to 53780 tons, and China Northern Rare Earth (Group) High-Tech Co.Ltd(600111) a new smelting separation product index accounted for 96% of the total increment, which guaranteed the product increment in 2022 to a certain extent. ② After signing the purchase agreement with Baotou Steel, although the purchase price has been adjusted in 2022 (up 65.27% to 268872 yuan / ton), it is still significantly lower than the market price (only 50% of the market price), which has a cost advantage. ③ Accelerate the clean-up of inefficient assets, and the operating efficiency is expected to continue to improve. In 2021, the company’s total asset turnover increased by 16.1% year-on-year to 1.01. As the company clears up inefficient assets, there is still room for further improvement of operating efficiency. ④ There is strong demand in the downstream magnetic material industry of rare earth. Since the beginning of 2022, the high listing price of the company’s products has remained stable, and the price of rare earth may tend to be stable. As an industry leader, the company is expected to fully enjoy the improvement of industry prosperity.
Investment suggestion: the company obtains a strong cost advantage by purchasing Inner Mongolia Baotou Steel Union Co.Ltd(600010) the low-cost rare earth concentrate, and the growth of production and sales is determined, which is expected to benefit from the prosperity of the rare earth industry. We raised the company’s net profit attributable to the parent company from 2022 to 2024 to 7.963 billion yuan, 10.220 billion yuan and 12.743 billion yuan, with EPS of 219, 2.81 and 3.51 yuan respectively; The PE corresponding to the closing price on April 15 was 16, 12 and 10 times respectively, maintaining the “recommended” rating.
Risk tips: the downstream demand is lower than expected, the index increases too fast, and the progress of overseas mining projects is higher than expected.
