\u3000\u3000 Zhejiang Huayou Cobalt Co.Ltd(603799) (603799)
Event: the company released the performance forecast on the evening of January 11. It is estimated that the net profit attributable to the parent company will be 3.7-4.2 billion yuan in 2021, with a year-on-year increase of 217.64% – 260.56%, and the non net profit attributable to the parent company will be 3.79-4.29 billion yuan, with a year-on-year increase of 237.2% – 281.68%.
Comments:
The simultaneous rise in volume and price has led to a significant increase in performance: according to the performance forecast, the net profit attributable to the parent company of Q4 is RMB 1.33-1.83 billion, a year-on-year increase of 178-283% and a month-on-month increase of 48-103%. Both volume and price have led to a significant increase in performance: 1) price: the average price of ncm622 ternary precursor 2021q4 is 140000 yuan / ton, a year-on-year increase of + 57% and a month on month increase of + 2.5%; The average price of Yangtze River Nonferrous cobalt 2021q4 was 441000 yuan / ton, with a year-on-year increase of + 63% and a month on month increase of + 18%; The average price of Changjiang nonferrous copper 2021q4 was 71000 yuan / ton, a year-on-year increase of + 30% and a month on month increase of + 2%. 2) Volume: the production capacity of copper, cobalt and ternary precursors of the company continues to release, and BAMO technology brings about an increase in the output of cathode materials (the equity change will be completed on July 29, 2021).
Indonesia’s wet nickel project has been successfully put into operation and the nickel layout has been implemented: some production lines of the laterite nickel ore hydrometallurgy project with an annual output of 60000 tons of nickel and 7800 tons of cobalt have completed equipment installation and commissioning, and put into trial production at the end of December 2021, successfully producing the first batch of products; The main performance indexes of the product are qualified. Marking the official landing of nickel plate layout. Huake 45000 ton pyrometallurgical project and Huafei 120000 ton wet nickel project are progressing smoothly and will be gradually put into operation from 2022 to 2023, contributing incremental profits.
Acquire prospect lithium mining company and complete the layout of lithium resources: the company announced on the evening of December 22 that it plans to acquire 100% equity of Zimbabwe prospect lithium mining company with us $422 million, which owns 100% equity of Arcadia lithium mine in Zimbabwe. The feasibility study report in December 2021 shows that the project has a construction period of 2 years, a production life of 18 years, open-pit mining, and an annual ore processing capacity of 2.4 million tons, The annual output is 147000 tons of spodumene concentrate, 94000 tons of technical lithium permeable feldspar concentrate, 24000 tons of chemical lithium permeable feldspar concentrate and 0.3 tons of tantalum concentrate. By the end of 2020, small-scale open mining has been carried out, and a lithium permeable feldspar pilot production line has been operated. The first batch of products will be shipped and sold in October 2021.
Profit forecast, valuation and rating: in 2021, the average price of copper / cobalt will be 6.9/378000 yuan / ton, and the price of nickel will be 18000 US dollars / ton. Considering the risk of decline in the demand for basic metals and the high prosperity of new energy, the prices of copper and nickel will fall slightly in the future, and the price of cobalt will be stable as a whole. Assuming that the copper price in 2022 / 2023 is 65 / 65000 yuan / ton, the cobalt price is 38.9 / 389000 yuan / ton and the nickel price is 1.7/16000 US dollars / ton, the company’s profit forecast (excluding the performance of the prospective lithium mining company temporarily) is increased. It is estimated that the net profit attributable to the parent company in 2021-2023 will be 4.06/52.3/6.7 billion yuan respectively (the increase range is 25% / 26% / 16%), with a year-on-year increase of 249% / 29% / 28%, and the corresponding PE of the current stock price is 28 / 22 / 17x respectively, Maintain the “buy” rating.
Risk tip: the price of cobalt and copper fluctuates greatly, 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; There is a risk that lithium prices will fall more than expected.
