\u3000\u30 Shenzhen Zhenye(Group)Co.Ltd(000006) 3 Zte Corporation(000063) 0)
The net profit attributable to the parent company increased by 258.29% year-on-year, and the company achieved the best performance in history. In 2021, the company achieved an operating revenue of 131034 billion yuan, a year-on-year increase of 31.77%; The net profit attributable to the parent company was 3.101 billion yuan, a year-on-year increase of 258.29%; The net profit deducted from non parent company was 2.738 billion yuan, with a year-on-year increase of 299.88%. The company’s performance increased significantly due to the sharp rise in the price of copper products and by-product sulfuric acid during the year and the continuous recovery of TC / RCS of copper concentrate.
Benefiting from high copper prices and high processing fees, the copper sector releases its profit potential. In 2021, the copper price increased significantly. The average spot price of the whole year was 68490 yuan / ton, an increase of 40.50% year-on-year. The maximum price of LME copper exceeded 10000 US dollars / ton; In addition, spot TC / RCS has continued to rise since April 21. Benefiting from this, the company’s copper smelting and self-produced copper business performed well in 2021, with a copper product revenue of 114306 billion, a year-on-year increase of 33.59%, contributing a gross profit of 4.959 billion yuan, a year-on-year increase of 70.30%, and a gross profit margin increase of 0.94% to 4.34%. Due to geopolitics and high inflation expectations, the current copper price continues to operate at a high level. At the same time, due to the release of overseas copper mining capacity and the contraction of China’s smelting capacity, the 22 year old single TC / RCS has ended the downward trend, and there is still room for spot TC / RCS to rise. The company’s copper product sector is expected to fully share the dividends of high copper price and high TC / RCS, helping the company’s performance to a new level.
The performance of sulfuric acid business is bright, and the price continues to be high, which helps the growth of the company. Benefiting from the rising price of sulfuric acid, the chemical sector affiliated to sulfuric acid turned losses into profits in 2021. The annual production of sulfuric acid was 4.8681 million tons, with a year-on-year increase of 10.53%, the revenue was 3.791 billion yuan, with a year-on-year increase of 58.16%, the gross profit was 1.506 billion yuan, and the gross profit margin was as high as 39.72%, an increase of 40.97% compared with last year. It is the main contributor to the increase of the company’s performance. Since the beginning of 2022, due to the high price of raw sulfur and the strong demand for downstream phosphate fertilizer, the price of sulfuric acid continues to rise. At present, the quotation of Tongling Nonferrous Metals Group Co.Ltd(000630) sulfuric acid is 980 yuan / ton, an increase of 108.51% compared with the beginning of the year; The company uses copper smelting tail gas to produce sulfuric acid, with a production capacity of nearly 500 tons and a cost of about 150 yuan / ton. The cost advantage is obvious. Benefiting from this, the company’s performance is expected to continue to improve.
Mirador copper mine overfulfilled its production tasks and injected strong expectations. According to the company’s report, Mirador copper mine completed 388300 tons of copper concentrate and 89200 tons of copper in 2021, achieved a sales revenue of 907 million US dollars, and exceeded the production task; It is estimated that the annual output of copper in 2022 is expected to reach more than 100000 tons, forming a strong guarantee for the company’s raw material demand. Mirador copper mine injection is progressing steadily. If the injection is successful, the copper mine reserves and output of listed companies will increase significantly, which is expected to become a leading enterprise in the copper industry.
Investment suggestion: the company integrates copper mining, copper smelting and copper deep processing. With the rise of copper price, TC / RCS and sulfuric acid price, the company’s performance is expected to grow steadily. The company’s operating revenue is expected to reach 152976 billion yuan, 157843 billion yuan and 162633 billion yuan from 2022 to 2024, with EPS of 0.29, 0.38 and 0.39 respectively. Maintain the “buy” rating.
Risk tip: copper price drops, Mirador copper mine injection progress is less than expected, and sulfuric acid price callback
