\u3000\u3 Shengda Resources Co.Ltd(000603) 979 Jchx Mining Management Co.Ltd(603979) )
Event overview. The company released its 2021 annual report and 2022 first quarter report. In 2021, the company achieved revenue of 4.5 billion yuan, a year-on-year increase of 16.57%, net profit attributable to the parent company of 471 million yuan, a year-on-year increase of 28.93%, corresponding to Q4 revenue of 1.226 billion yuan, a year-on-year increase of 12.20%, net profit attributable to the parent company of 118 million yuan, a year-on-year increase of 32.45%. In 2022q1, the company achieved a revenue of 1.142 billion yuan, a year-on-year increase of + 22.68%, and a net profit attributable to the parent company of 159 million yuan, a year-on-year increase of + 27.25%. The company announced that in 2022, the total mining and supply target is 329743 million tons (+ 3.45%), and the total excavation target is 3.5846 million cubic meters (+ 6.23%). In 2022, the mining and dressing project of dikulushi Copper Mine plans to process about 150000 tons of ore and produce about 10000 tons of copper (equivalent) in copper concentrate. Guizhou phosphate mine project plans to realize mining in the south area in the first half of the year, and complete the preparation of experimental stope within the year. Lonshi mine strives to make preliminary preparations and put into operation by the end of 2023.
In line with expectations, overseas growth is strong. In 2021, with advanced technology and 20 years of overseas case experience, the company completely opened up the international market and further expanded its old customers. It successively signed a number of overseas contracts and incremental service projects such as kamoa copper mine in Congo, bor copper gold mine in Serbia and chukalu copper gold mine in Serbia. At the same time, it developed several new countries and customers and undertook many projects such as Sharkia lead zinc mine and Kaiyuan potassium chloride project in Laos, Overseas revenue increased by 36% year-on-year to 2.54 billion yuan. At present, 12 projects are under construction, which is the main driving force of revenue growth. At present, there are 20 projects under construction in China, with a revenue of 1.76 billion yuan in 2021, a year-on-year increase of - 4.93%. It is judged that the main reason is the optimization of the company's customer structure and the implementation of the strategy of "big market, big owner and big project". Affected by the increase of operating costs under the epidemic, the gross profit margin of the company's mining service business was 27.5% in 2021, a slight decrease of 0.9 percentage points, but due to the scale effect, the effective tax rate decreased year-on-year, and the profit growth exceeded the income. In 2022q1, the company's revenue and performance increased by 22.7% / 27.2% year-on-year. It is judged that the main reason is also the development of overseas business, and the growth center of the main mine service is expected to be further improved (considering that the incentive fee of RMB 11.75 million is accrued in 2022q1 and included in the relevant management expenses, the actual business profit will grow faster after restoration).
The development of mine resources will be accelerated in 2024 or the year of outbreak. By the end of 2021, the self owned mines have owned Guizhou phosphate mine, Congo dikulushi copper and silver mine and Congo lonshi copper mine (only statistical and table caliber). According to the announcement, the equity reserves at the end of 2021 are 1.06 million tons of copper ore, 249 tons of silver metal, 7 tons of gold metal and 19.2 million tons of phosphate ore (32.65% grade). After reaching the production capacity, we expect a total annual capacity of 800000 tons of phosphate ore and 50000 tons of copper and silver ore with copper equivalent. According to the data disclosed in the annual report, dikulushi mine has been put into operation in December 2021, with a total of nearly 10000 tons of copper equivalent in 2022. Lonshi copper mine was put into operation at the end of 2023, with an annual copper output of 40000 tons, which means that the company's annual copper output will total 50000 tons from 2024. According to wind data, the current international copper concentrate price has exceeded the US $10000 / ton mark, which is neutral and conservative. According to the calculation of the net profit of US $4000 / ton, the profit contributed by the self owned copper mine may reach US $200 million / year in 2024, corresponding to nearly 1.3 billion yuan / year. In addition, according to the disclosure of the annual report, Guizhou Liangchahe phosphate mine company, which accounts for 90% of the equity, plans to build a 300000 t / a production capacity in the south this year. It is conservatively expected to reach the production capacity in 2023. According to the net profit of 350400 yuan / t, we estimate that it will contribute 100 million yuan of profit in 2023, and the remaining 500000 T / a phosphate mine in the north will contribute about 300 million yuan of profit in 2024, which is significantly more flexible than the current profit of the company.
The "service + resource" two wheel drive accelerated and entered a high growth cycle. Since 2021h2, the company has signed a number of new billion yuan foreign contracts, with sufficient project reserves, and strong output guidance for key customers such as Zijin Mining Group Company Limited(601899) 2022, benefiting the core of the company. At the same time, as the leader of mine service in China, the company is expected to gradually increase the number of overseas customers from 2022, further accelerating the main business of mine service. In addition, according to the calculation of the construction in progress data disclosed in the annual report, the average single scale of overseas projects is much larger than that in China. In the future, the company's big customer and big owner strategy may be further deepened, and the scale effect will be further reflected. Moreover, the mining service belongs to a high barrier and high viscosity industry in construction engineering, and customers usually rarely change suppliers. Therefore, the medium-term growth logic of the company's main mining service industry is clear; In terms of self operated mine resources, according to the company's disclosure, the effective supply of the global mining and beneficiation industry has become strongly rigid, and the global exploration investment in the field of non-ferrous metals has shrunk in stages. According to the statistics of market institutions quoting S & P data, the global exploration investment in the field of non-ferrous metals totaled US $75.44 billion from 2011 to 2015, with an average annual investment of US $15.09 billion, while the investment in the exploration field decreased to US $43.44 billion from 2016 to 2020, with an average annual investment shrinking to US $8.69 billion, The decrease is 43%, which means that there will be stronger and stronger rigid constraints from the mine supply end in the future. At present, LME inventory is at a relatively low level of 119000 tons. Under the situation of global economic recovery after the epidemic and the growth of demand for chemical fertilizer and new energy, we believe that the overall price of copper mine and phosphate rock will remain in tight balance. With the continuous production of Guizhou Phosphate Mine and Congo lonshi mine from 2022 to 2023, the incremental elasticity of mine development business is significant, which makes the company's performance enter a high growth cycle and further opens the ceiling of the company's growth.
Investment suggestions:
We believe that according to the segment valuation, the current market value is only price in the main business of mining clothing. At present, copper mine + phosphate rock is basically equivalent to low-cost call options, with outstanding investment performance price ratio. Considering the impact of China's epidemic situation, the growth assumption of mine service is reduced, but considering the large increase in copper price and phosphate rock price, and the south mining area of Guizhou phosphate rock is expected to be put into operation in 2022, the mineral price assumption and mineral sales assumption in 2022 are slightly increased. The revenue forecast for 2022 / 2023 is adjusted to 6.16/7.78 billion yuan (Original: 6.44/7.89 billion yuan), and the EPS forecast for 2022 / 2023 is adjusted to 1.36/1.81 yuan (Original: 1.39/1.71 yuan). The new revenue forecast for 2024 is 11.46 billion yuan, and the EPS forecast is 3.60 yuan. The EPS from 2022 to 2024 corresponds to 22.4 yuan on April 19, with a closing price of 16.49/12.35/6.23xpe, maintaining the target price of 31.28 yuan and the "buy" rating.
Risk tips
The epidemic affected the commencement of construction, the progress of resource development was lower than expected, the decline of metal prices, systemic risks, etc.
