\u3000\u30 Shenzhen Zhenye(Group)Co.Ltd(000006) 3 Zte Corporation(000063) 0)
Event: on April 19, 2022, the company released its 2021 annual report. In 2021, the company achieved revenue of 131034 billion yuan, a year-on-year increase of 31.8%; The net profit attributable to the parent company was 3.101 billion yuan, a year-on-year increase of 258.3%; Net profit deducted from non parent company was 2.738 billion yuan, with a year-on-year increase of 299.9%. In 2021q4, the company achieved a revenue of 30.311 billion yuan, a year-on-year increase of 9.5% and a month on month decrease of 6.9%; The net profit attributable to the parent company was 652 million yuan, with a year-on-year increase of 396.5% and a month on month decrease of 42.2%; Net profit deducted from non parent company was 567 million yuan, with a year-on-year increase of 1326.8% and a month on month decrease of 49.7%. The performance is in line with the annual performance express.
The company announced the performance forecast for the first quarter of 2022. It is estimated that the net profit attributable to the parent company will reach 615 million yuan in the first quarter of 2022, with a year-on-year increase of 60.51% and a month on month decrease of 5.64%. The main reason for the month on month decrease in performance is that in the middle and late March of 2022, the covid-19 pneumonia epidemic situation in Tongling area was relatively severe, the mines and factories under the company implemented closed production, and the overall logistics arrangement was limited. As of April 15, the epidemic situation in Tongling had been alleviated, and the production and operation of the company had returned to normal.
The rise in copper and sulfuric acid prices led to a sharp rise in profits in 2021, the best performance in history. In 2021, the average annual price of cathode copper in China was 68401 yuan / ton, with a year-on-year increase of 40.24%. The increase in the price of cathode copper was mainly due to the loose Federal Reserve, the superposition of the epidemic affected the supply of copper mine, and the copper price remained high; Benefiting from the rising demand for chemical fertilizer, the annual average price of sulfuric acid in China was 642 yuan / ton, a year-on-year increase of 303.44%. In October 21, the price of sulfuric acid reached 1031 yuan / ton, the highest price in recent ten years; Due to the shortage of copper concentrate and relatively rich smelting capacity, the average TC / RC price in 2021 was 48.26 US dollars / ton and 4.83 US cents / pound, a year-on-year decrease of 10.3%.
The decrease in net profit attributable to parent company in 2021q4 was mainly dragged down by impairment. In terms of spin off, the month on month decrease in net profit attributable to the parent company was mainly due to the provision for impairment (- 429 million yuan) and the decrease in gross profit (- 132 million yuan). The impairment is mainly due to the provision for inventory falling price and the provision for impairment of fixed assets. The decline in gross profit may be mainly due to the decline of 18% in the price of sulfuric acid compared with the third quarter. On a month on month basis, other profit reduction points include changes in fair value (- 98 million yuan), expenses and taxes (- 61 million yuan), etc; The main profit increasing points are other / investment income (+ 152 million yuan), income tax (+ 55 million yuan) and minority shareholders’ profit and loss (+ 52 million yuan).
The core focus of the future: Four-dimensional resonance looks forward to a new high in profits. ① Mineral copper: according to the non competition commitment of the group, the Mirador copper mine of the group may be injected into the listed company, and the first phase of the project alone will bring an increase of 100000 tons of mineral copper. ② Processing fee: the smelting capacity has been tightened, and the processing fee has continued to rise since the beginning of 2022. ③ Sulfuric acid: the cost of smelting by-product sulfuric acid is stable, the price is at a historical high, and the profit elasticity is large. ④ Copper foil processing: Copper Crown copper foil is listed, lithium copper foil is in short supply, and the future can be expected.
Investment suggestion: the prices of the company’s main products have risen since the beginning of the year, and the industry boom is high. Under the high price, the company’s profit is expected to reach a new high. We raised the company’s net profit attributable to the parent company from 2022 to 2024 to RMB 3.936 billion, RMB 4.154 billion and RMB 4.460 billion, with EPS of RMB 0.37, RMB 0.39 and RMB 0.42 respectively; The PE corresponding to the closing price on April 22 was 10, 9 and 9 times respectively, maintaining the “recommended” rating.
Risk tip: the supply of copper mine increased more than expected, the cost of sulfuric acid or smelting and processing fell, and the progress of asset injection was less than expected.
