\u3000\u3 Guangdong Shaoneng Group Co.Ltd(000601) 168 Western Mining Co.Ltd(601168) )
On April 22, 2022, the company released the annual report of 2021. In 2021, the company achieved a revenue of 38.401 billion yuan, a year-on-year increase of 34.5%; The net profit attributable to the parent company was 2.932 billion yuan, a year-on-year increase of 223%; Net profit deducted from non parent company was 2.814 billion yuan, with a year-on-year increase of 141.3%. In 2021q4, the company achieved a revenue of 9.339 billion yuan, an increase of 25.6% year-on-year and a decrease of 6.1% month on month; The net profit attributable to the parent company was 675 million yuan, an increase of 803.3% year-on-year and a decrease of 20.3% month on month; Net profit deducted from non parent company was 613 million yuan, with a year-on-year increase of 68.3% and a month on month decrease of 27%. The performance is in line with expectations.
The company released the forecast of the first quarterly report of 2022. It is estimated that the net profit attributable to the parent company in 2022q1 will increase by about 270 million yuan year-on-year to 745 million yuan, with a year-on-year increase of about 57% and a month on month increase of 10%. The main reason for the year-on-year increase in performance is that the reconstruction and expansion project of Yulong copper industry has reached the standard and stable production, the sales volume of copper concentrate and molybdenum concentrate in 2022q1 has increased compared with the same period of last year, and the price of copper concentrate, the company’s main product, has increased by 14% year-on-year to 71600 yuan / ton.
In 2021q4, the net profit attributable to the parent company decreased by 172 million yuan month on month. From the perspective of spin off, it is mainly due to the month on month decrease of 298 million yuan in expenses and taxes, and the month on month decrease of 126 million yuan in impairment loss. Due to the simultaneous rise in the volume and price of copper products and the high operation of zinc prices, the gross profit increased significantly year-on-year and month on month. In 2021q4, the average price of copper / zinc was 70500 / 23800 yuan, with a year-on-year increase of 29.2% / 15.6% and a month on month increase of 1.5% / 5.9%. The increase of impairment loss is mainly due to the aging of mining machinery and equipment, and the impairment of 44.3 million yuan is withdrawn in the whole year. Considering the small amount of impairment in the first three quarters, a large proportion of provision is made in Q4 in accounting treatment, which will not have an impact on subsequent production and operation.
Acquire the 27% equity of Qinghai Dongtai Jinaier lithium resources company held by the controlling shareholder. Dongtai Jinaier Salt Lake has excellent resource endowment, mature project technology, rapid production expansion and low lithium cost. (1) The production scale of lithium resources company is 30000 tons / year of lithium carbonate, 30000 tons / year of boric acid and 300000 tons / year of potassium sulfate. (2) Excellent resource endowment: LiCl porosity reserves are 2.0228 million tons, and the concentration is 303048 mg / L (equivalent to lithium ion concentration of about 494 mg / L). (3) The project technology is mature and can be rapidly expanded: at present, the lithium resources company and its holding subsidiary Qinghai lithium industry (holding 74.5%) have operated a production line with an annual output of 20000 tons of lithium carbonate and 100000 tons of potassium sulfate and supporting public and auxiliary facilities. The annual output of 30000 tons of lithium carbonate has been put on record. Lithium resources company can build and increase the annual output of 10000 tons of lithium carbonate production line within one year. (4) Low cost of lithium extraction: according to the disclosure of the company, the annual net profit after the completion of 30000 tons of lithium carbonate in the future will reach 1.46 billion yuan, and the price of lithium carbonate is assumed to be 92500 / ton. We expect the actual full cost of lithium carbonate of the company to be less than 30000 / ton, which is at the low quantile level of global lithium carbonate production cost.
Profit forecast and investment suggestion: the company’s Yulong Copper Mine contributes considerable increment. The second phase of Yulong copper mine will be fully produced in 2022. We expect the company’s copper concentrate output to reach 150000 tons in 2022. Meanwhile, nickel and vanadium projects will be put into operation successively; The salt lake lithium extraction project can be expected in the future. Superimposed copper, zinc, lead and lithium prices are at historic highs. We raised the profit forecast of the company. It is expected that the company will realize a net profit attributable to the parent company of 3.421 billion yuan, 3.533 billion yuan and 3.625 billion yuan from 2022 to 2024. The PE corresponding to the closing price on April 25 is 8x, 8x and 8x, maintaining the “recommended” rating.
Risk tip: the progress of the project is not as expected, the prices of copper, lead, zinc and lithium fall, and the acquisition is blocked.
