\u3000\u3 Jointo Energy Investment Co.Ltd.Hebei(000600) 497 Yunnan Chihong Zinc & Germanium Co.Ltd(600497) )
The company’s performance increased by 24% year-on-year in 2021 and 48% year-on-year in 2022q1. In 2021, the company achieved a revenue of 21.72 billion yuan (+ 13.3%), a net profit attributable to the parent company of 584 million yuan (+ 23.9%), deducting a net profit not attributable to the parent company of 946 million yuan (+ 128.4%), and a net cash flow from operating activities of 3.24 billion yuan (+ 21.3%). The company plans to distribute cash dividends of RMB 1.20 (including tax) to all shareholders for every 10 shares, with a total of RMB 611 million, accounting for 104.54% of the net profit attributable to shareholders of Listed Companies in the company’s consolidated statements in 2021.
In 2022q1, the company achieved revenue of 5.45 billion yuan (+ 3.7%), net profit attributable to parent company of 548 million yuan (+ 48.3%), net profit attributable to non parent company of 499 million yuan (+ 51.4%), and net cash flow from operating activities of 675 million yuan (+ 27.6%). The year-on-year growth of the company’s performance mainly benefited from the rise in metal prices. From 2021q1 to 2022q1, the quarterly average price including tax of zinc ingots in China is 21099 / 22159 / 22607 / 23765 / 25286 yuan / ton respectively, while the sales cost excluding tax of zinc ingots produced by the company in 2021 is 14147 yuan / ton, so the company’s performance is more flexible with the fluctuation of zinc price.
Enter the accelerated expansion period. In 2021, more than 500000 tons of lead-zinc resources were added (not recorded), mainly from the increased storage of lead-zinc resources in the main mine of Yiliang, Huize, realizing that the increased storage is greater than the consumption. The mine increment in 2022 comes from Yiliang mine and Xinhu, Tibet. The company’s goal in the 14th five year plan: to keep the reserves of lead-zinc resources not less than 50 million tons of metal, ensure the minimum metal output of 800000 tons / year (strive to 1 million tons / year), and the smelting capacity of lead-zinc is 1 million tons / year (strive to 1.36 million tons / year); The annual operating income is 30 billion yuan; The total annual profit is 4 billion yuan.
Risk warning: the promotion of new projects is not as expected; The epidemic affects downstream demand.
Investment advice: maintain the “buy” rating.
Referring to the average price of various commodities since the beginning of this year, assuming that the average annual spot price of zinc ingot is 26000 yuan / ton in 2022 / 2023 / 2024, the processing fee of zinc concentrate is 3750 yuan / ton, the average annual spot price of lead ingot is 15268 yuan / ton, the processing fee of lead concentrate is 1200 yuan / ton, and the silver price is 5000 yuan / kg. It is estimated that the operating revenue of the company from 2022 to 2024 will be 22.96/23.03/23.16 billion yuan, and the net profit attributable to the parent company will be 23.93/28.06/2.890 billion yuan respectively, with a year-on-year increase of 309.4/17.3/3.0%, Diluted EPS is 0.47/0.55/0.57 yuan respectively, and the corresponding PE of the current stock price is 11.7/10.0/9.7x. Considering that the company is a leading lead-zinc enterprise in China, has the world’s top high-grade lead-zinc mine, the layout of supporting smelting capacity is reasonable, and fully benefits from the tight supply of zinc concentrate and the high zinc price pattern, the company will rely on shareholders to accelerate expansion and clear path in the next 2-3 years to maintain the “buy” rating.
