\u3000\u3 Shengda Resources Co.Ltd(000603) 979 Jchx Mining Management Co.Ltd(603979) )
The company’s performance has improved steadily. In 2021, the company’s mine service business accelerated, with an annual operating revenue of 4.504 billion yuan, a year-on-year increase of 16.57%; The net profit attributable to shareholders of listed companies was 471 million yuan, a year-on-year increase of 28.93%. In the first quarter of 2022, the operating revenue in a single quarter was 1.142 billion yuan, down 6.85% month on month; The net profit attributable to shareholders of listed companies was 159 million yuan, an increase of 34.75% month on month. In addition, the company plans to pay a cash dividend of 1.0 yuan (including tax) for every 10 shares.
The overseas business has accelerated and the mining service business has become better and stronger. With its technical advantages and excellent service performance, the company has been widely recognized by large international mining companies, and its overseas business has further expanded from Zambia, the Democratic Republic of the Congo, Serbia, Indonesia to Kazakhstan, Laos and other countries. In 2021, the company achieved overseas revenue of 2.542 billion yuan, accounting for 59.12% of the total revenue, and the gross profit margin also increased to 27.74%. The company takes “big market, big owners and big projects” as the market strategy to form customer stickiness and grow together with the owners. In the future, the company will have a high growth rate or sustainable development in the field of mining services.
Steady progress was made in resource development business to create the second curve of performance growth. In recent years, the company has successively acquired dikulushi copper mine, lonshi copper mine and Liangchahe Phosphate Mine in the Democratic Republic of the Congo, and participated in Cordoba mining company. At present, the company has resource reserves of 1.06 million tons of copper, 249 tons of silver, 7 tons of gold and 19.2 million tons of phosphate rock (grade 32.65%). In terms of copper mine, the mining and beneficiation project of dikulushi copper mine has completed the resumption of production as planned and officially put into operation at the end of 2021. It is expected to contribute 10000 tons of copper this year; Lonshi copper mine is expected to be completed and put into operation by the end of 2023, with an annual output of about 40000 tons of copper after the project is completed. In terms of phosphate rock, Liangchahe phosphate rock, which is 90% owned by the company, plans to adopt zoning underground mining, of which the annual production scale of the southern mining area is 300000 tons and the construction period is one year. It is planned to officially start construction in the first half of this year and complete the preparation of the test stope within this year; The production scale of the northern mining area is 500000 tons and the construction period is 3 years. The development of the resource sector has laid a solid foundation for the company’s medium and long-term development, and the company’s performance can be expected to be flexible.
Risk warning: the development progress of the company’s resources does not meet expectations; Copper prices fell more than expected.
Investment suggestion: the company’s mining service business has obvious advantages, the gross profit margin is stable, and the scale is expected to maintain rapid growth with major customers. The mine resources business has laid out high-quality copper and phosphate resources, and the project development has made steady progress with broad development prospects. Considering the continuation of the high copper price boom, we slightly raised the original performance forecast. It is estimated that the company’s revenue from 2022 to 2024 will be 5.94/7.01/10.24 billion yuan (5.92/6.98/ – billion yuan in the original forecast), the net profit attributable to the parent company will be 8.1/9.7/1.79 billion yuan (7.9/9.8/ – billion yuan in the original forecast), and the annual growth rate of profit will be 72.3% / 19.8% / 84.2% respectively; Diluted EPS is 1.37/1.64/3.01 yuan, and the corresponding PE of the current stock price is 16.4/13.7/7.4x, maintaining the “buy” rating.
