\u3000\u3 Shengda Resources Co.Ltd(000603) 799 Zhejiang Huayou Cobalt Co.Ltd(603799) )
Key points
Event: the company released its annual report for 2021 after hours on April 22, realizing an operating revenue of 35.3 billion yuan, a year-on-year increase of 67%; The net profit attributable to shareholders of listed companies was 3.898 billion yuan, a year-on-year increase of 235%; After deducting non profits, the net profit attributable to shareholders of listed companies was 3.853 billion yuan, a year-on-year increase of 243%.
Comments:
The simultaneous rise in volume and price has led to a significant increase in performance. The performance is basically consistent with the forecast, and the significant increase in performance is mainly due to the simultaneous rise of volume and price. 1) Volume: 59112 tons of precursors sold, a year-on-year increase of + 77%; 56703 tons of cathode materials (annual sales volume of BAMO Technology), year-on-year + 115%; 25120 tons of cobalt products, a year-on-year increase of + 11%; 93443 tons of copper products, a year-on-year increase of + 19%. 2) Price: in 2021, the average price of LME copper was US $9294 / ton, with a year-on-year increase of 50%; MB cobalt price (standard grade) was US $24.3/lb, with a year-on-year increase of 56%. In 2021, ROE (diluted) reached 20.11%, with a year-on-year increase of 8.37 percentage points; The inventory was 9 billion yuan, a year-on-year increase, mainly due to the expansion of production and sales scale and the consolidation of BAMO technology.
Research and development efforts have been strengthened, and high nickel precursor products have gained a lot. In 2021, the R & D expenditure was 820 million yuan, with a year-on-year increase of 120%, mainly due to the increase in the R & D of high-performance precursors and cathode products. In 2021, the company developed and mass produced a number of 8-series and 9-series precursors, and reserved a number of new products of high nickel and NCMA precursors; Research, develop and reserve a variety of medium nickel high-voltage single crystal cathode materials and 9-series ultra-high nickel cathode materials, take the lead in realizing the monthly production of 1000 ton high-performance ternary cathode materials of 9-series ultra-high nickel NCMA and deliver them to world-famous battery customers.
Indonesia’s nickel project is gradually implemented and is optimistic about the profit release from 2022 to 2023. Huayue wet process project has been put into trial production. By the end of March 2022, the full set of core units of high-pressure acid leaching have full capacity, and it is expected to reach production by the end of June; Some subprojects of Huake fire method project were put into trial production at the end of March, and the whole process is expected to be completed in the second half of the year; Huafei wet process project is expected to meet the feeding conditions in the first half of 2023. Meanwhile, in March 2022, the company reached an agreement with Volkswagen (China) and Qingshan group on the construction of a nickel cobalt hydroxide hydrometallurgy project with an annual output of 120000 tons of nickel metal.
The precursor cathode project is progressing smoothly, and the delivery of lithium project is completed. Some production lines of the high nickel ternary precursor project with an annual output of 50000 tons have entered trial production in January 2022. Puhua and Leyou have entered the stage of stable mass production; Huajin and Huapu are actively promoting mass production certification. Chengdu BAMO cathode material phase III 50000 tons, phase 1 is fully connected, and phase 2 Civil Engineering is about to be completed. The acquisition of prospect lithium in Zimbabwe was completed on April 20.
Profit forecast, valuation and rating: considering the sharp rise in metal prices, the company’s profit forecast is raised. Assuming that the price of copper in 2022 / 2023 / 2024 is 7 / 6.8/6500 yuan / ton, the price of cobalt is 52 / 45 / 42000 yuan / ton and the price of nickel is 2.7/218000 us dollars / ton, the net profit attributable to the parent company in 20222023 is expected to be 6.25/8.48 billion yuan respectively (the increase range is 20% / 27%), and the profit forecast for 2024 is increased by 10.83 billion yuan, a year-on-year increase of 60% / 36% / 28%, The current share price corresponding to PE is 14/11/8x respectively, maintaining the “buy” rating.
Risk tip: the price of cobalt and copper fluctuates sharply, the progress of the company’s investment projects is less than expected, and the sales volume of new energy vehicles is less than expected; Risk of cash flow deterioration due to high capital expenditure.
