\u3000\u30 China Baoan Group Co.Ltd(000009) 33 Henan Shenhuo Coal&Power Co.Ltd(000933) )
The coal and aluminum industry continued its high boom, and Q1 performance increased significantly year-on-year. Maintain “buy” rating
The company released the first quarterly report of 2022, and achieved an operating revenue of 10.75 billion yuan in the first quarter, a year-on-year increase of + 57.3%; The net profit attributable to the parent company was 1.95 billion yuan, a year-on-year increase of 232.6%; The net profit attributable to the parent company after deduction was 1.94 billion yuan, a year-on-year increase of 276.3%. The actual net profit attributable to the parent company in the first quarter exceeded the previous performance by 210 million yuan. Affected by the sharp year-on-year rise in the prices of coal and electrolytic aluminum, the profitability of the company increased significantly in the first quarter. Considering the upward movement of the price center of coal and aluminum, the full operation of hydropower aluminum after the asset injection of Yunnan Shenhuo aluminum, and the technological transformation of Liangbei Coal Mine are expected to contribute to the increment, the company’s high profit is expected to continue. We raised the profit forecast for 20222024, and predicted that the net profit attributable to the parent company in 20222024 would be 6.612/70.13/72.97 billion yuan (the previous value was 5.51/60.1/62.6), a year-on-year increase of + 104.4% / 6.1% / 4.0%; EPS is 2.94/3.12/3.24 yuan, corresponding to 4.1 / 3.8 / 3.7 times of PE of the current stock price. Maintain the “buy” rating.
Benefiting from the high price of coal and aluminum, the company’s profit may continue to increase
Electrolytic aluminum business: in Q1 2022, the overseas energy crisis continued to ferment. Under the condition of rising production costs, some European aluminum enterprises avoided losses by reducing production. At the same time, Russia was severely sanctioned by European and American countries. There is a contraction expectation of Russian aluminum supply. Overseas aluminum prices may remain high, which will inhibit the import of Chinese enterprises to a certain extent. Under the background of “carbon neutrality” and “steady growth”, China’s demand continues to improve. At the same time, the rise of electricity price leads to the loss control and production reduction of some enterprises. The supply and demand of electrolytic aluminum in China may remain tight, and the price is expected to run at a high level. The company’s electrolytic aluminum products are priced according to the market. From January to March, the average sales price excluding tax of the company’s electrolytic aluminum was + 37.2% year-on-year, and the average price of A00 aluminum of Changjiang nonferrous metals was + 36.45% year-on-year in the same period. The company fully benefited from the dividend of high aluminum price. Coal business: Yongcheng mining area under the company produces high-quality anthracite and Xuchang mining area produces lean coal, which are blast furnace fuel required by Chinese metallurgical enterprises. Since 2022, affected by geopolitics, Russian coal has been banned by the European Union, overseas coal prices have risen, coal imports have declined significantly, the Chinese market has maintained a tight balance, and coking coal prices have remained high. In Q1 2022, the average ore drawing price of Yongcheng anthracite was 2610 yuan / ton, a year-on-year increase of + 90.84%; The average price of Henan lean coal truck board was 2294 yuan / ton, a year-on-year increase of + 77.16%. The company’s coal sales model is mainly spot, benefiting from the central rise of coal price, and the profit of coal business may continue to increase.
The assets of Yunnan aluminum industry are about to be injected, and the technical transformation contribution of Liangbei Coal Mine is increasing
Electrolytic aluminum business: with all Baihetan Hydropower Station put into operation, Yunnan has abundant electricity, and the production of aluminum enterprises has resumed in an orderly manner. The production capacity of 900000 tons of Yunnan Shenhuo is expected to be fully put into operation by the end of April. According to the company’s announcement, the group plans to inject the remaining shares of Yunnan Shenhuo aluminum into the listed company. Under the background of the sharp rise of aluminum price, the asset injection is expected to further thicken the performance. Coal business: the sector is also growing. With the continuous promotion of technical transformation and capacity expansion of Liangbei mine, the production capacity will increase to 2.4 million tons, which is expected to reach full capacity in 2023; The storage expansion of Liuhe coal mine is also advancing steadily.
Risk tip: the price of coal and aluminum fell more than expected; The recovery of the epidemic was not as expected; The progress of aluminum production restoration in Yunnan is less than expected; The progress of coal mine technical transformation is less than expected
