\u3000\u3 Shengda Resources Co.Ltd(000603) 979 Jchx Mining Management Co.Ltd(603979) )
Event: Jchx Mining Management Co.Ltd(603979) released the annual report of 2021 and the first quarterly report of 2022. In 2021, the company realized an operating revenue of 4.504 billion, a year-on-year increase of 16.57%, a net profit attributable to the parent company of 471 million, a year-on-year increase of 28.93%, and a net profit not attributable to the parent company of 456 million, a year-on-year increase of 24.77%. After the year-on-year increase of RMB 1.19 billion, the net profit attributable to the parent company increased by 2.71 billion, and the net profit of 202q1 was 2.71 billion, with a year-on-year increase of RMB 2.72 billion. After the year-on-year increase of 2.71 billion, the net profit attributable to the parent company was 2.71 billion, and the net profit of 202q1 was 2.72 billion, with a year-on-year increase of 2.79 billion.
Overseas business expansion has driven the continuous high growth of mining service sector.
In terms of business content, in 2021, the company’s mining operation management / mine engineering construction / mine engineering design and consulting achieved an operating revenue of 2.86/14.3/0.1 billion, accounting for 63.5% / 31.7% / 0.2%, a year-on-year increase of + 15.6 / – 16.4/0pcts. During the reporting period, the company vigorously explored the overseas mine development service market, the scale of mining operation management projects increased, and some mine engineering construction projects changed from the construction period to the mining operation period.
From the regional perspective, the company achieved a 25.4/17.6 revenue of foreign and Chinese mainland in 2021, accounting for 56.4%/39.0%, +8.0/-8.8pcts, and overseas revenue surpassing the Chinese mainland and its share continued to rise.
With proper fee control, the company’s expense rate decreased by 0.99pcts year-on-year in 2021. Specifically: 1) the rate of administrative expenses decreased by 0.82pcts from 7.49% to 6.66%, mainly due to the year-on-year decrease of 1.26% (the share of employee compensation in administrative expenses of the company reached 60.42% in 2021); 2) The R & D expense ratio decreased by 0.22pcts from 1.96% to 1.75%, although the R & D expense increased by 3.71% year-on-year, and the growth of the company’s main revenue was faster; 3) The sales expense ratio increased by 0.03pcts from 0.40% to 0.44%, mainly due to the increase of 107.49% in advertising expenses and 26.83% in employee compensation due to market expansion; 4) The financial expense ratio increased by 0.02pcts from 2.32% to 2.34%, resulting in the withdrawal of interest expense of 458764 million yuan of the company’s convertible bonds in accordance with the enterprise standards during the reporting period (YoY + 64.97%).
The mining resources sector is gradually constructed and put into operation, and the growth logic is constantly fulfilled. Since 2019, the company has successively arranged a number of mine resources, mainly copper, gold, silver and phosphate rock. The equity resources of the company’s copper (metal) are 1.06 million tons, 7 tons of gold, 249 tons of silver and 19.2 million tons of phosphate rock. During the reporting period, dikulushi copper mine was put into operation as scheduled. It is expected to take the lead in forming 10000 tons of copper concentrate capacity by the end of 2022. It is expected to add 40000 tons of capacity of lonshi copper mine in 2024. At that time, a total copper production capacity of 5 tons / year will be formed, which will become the foundation and core of the company’s continuous growth in the next 3-5 years.
Profit forecast and investment suggestion: the company is a leader in China’s mining service industry, and its main business is expanding in the overseas market. At the same time, the company’s layout of mine resources dominated by copper mine is expected to open up new growth space for the company. We expect the company to achieve an operating revenue of 5.856/70.50/10.604 billion yuan in 2022 / 2023 / 2024, a net profit of 817 million yuan, 1.064 billion yuan and 2.233 billion yuan respectively, with a corresponding EPS of 1.38/1.79/3.76. At present, the PE valuation corresponding to the stock price is 16 / 12 / 6 times respectively, maintaining the “buy” rating of the company.
Risk warning event: overseas market development risk; Metal price fluctuation risk; The project is put into operation less than expected risks, etc.
