\u3000\u3 Guangdong Shaoneng Group Co.Ltd(000601) 958 Jinduicheng Molybdenum Co.Ltd(601958) )
Company events
The company disclosed the annual report of 2021 and the quarterly report of 2022q1: in 2021, the company realized an operating revenue of 7.974 billion yuan (+ 5.24%); The net profit attributable to the parent company was 495 million yuan (+ 171.85%); The net profit attributable to the parent company after deducting non profits was RMB 464 million (+ 181.06%). In 2022q1, the company realized an operating revenue of 2.249 billion yuan (+ 37.41%); The net profit attributable to the parent company was 275 million yuan (+ 276.14%); The net profit attributable to the parent company after deducting non profits was RMB 271 million (+ 301.04%).
The production and operation are stable, and the molybdenum price increases significantly, which increases the company’s performance
1) quantity: the company seizes the market opportunity of the sharp rise in molybdenum price, increases the amount of marketable products, and maximizes the income of the current period. In 2021, the company sold 33000 tons of various molybdenum products, ranking the second in the world in terms of market share, and further improved its industry status and influence. 2) Price: the recovery of domestic and foreign demand and the tightening pattern of supply and demand push the molybdenum price into an upward cycle. In 2021, the market price of molybdenum showed an overall trend of warming up and rising and high-level consolidation. According to MW data, the annual average price of molybdenum oxide was $15.7/lb molybdenum, up 81% year-on-year; The average price of ferromolybdenum in China was 136000 yuan / ton, up about 36% year-on-year. The high price of the company’s products contributes to the improvement of profitability. 3) The rising price of molybdenum in 22q1 helped to release the flexibility of performance: the company’s single quarter profit in 2022q1 reached 275 million yuan, a year-on-year increase of 37.41%, reaching the high profit point of single quarter in recent years due to the rising price of molybdenum. In 2022q1, the price of molybdenum continued to rise. The average price of molybdenum oxide was 19.05 US dollars / pound of molybdenum, up 68.59% year-on-year. The average price of ferromolybdenum in China was 167500 yuan / ton, up 52.97% year-on-year.
Actively implement cash dividends and give back to shareholders
The company attaches great importance to the return to investors and shares the development achievements with investors. The cumulative cash dividend in recent three years has reached 2.23 billion yuan. According to the company’s dividend plan for 2021, the company distributed cash dividends of RMB 1.00 (including tax) to all shareholders for every 10 shares, with a total cash distribution of RMB 323 million and the remaining undistributed profits of RMB 95 million.
The tight balance between global supply and demand supports the high operation of molybdenum price, and the company is expected to continue to benefit
Under the background of the expected warming of steady growth and the structural upgrading of the iron and steel industry, the strong demand of the iron and steel industry is expected to further drive the growth of molybdenum demand. According to the data of Antaike, the total bidding volume of mainstream steel mills in China in 2022q1 is 33200 tons, with a year-on-year increase of 29.23%. The increase in the number of steel mill bidding has driven the gradual increase in the demand for molybdenum oxide and other products. In terms of supply, due to the reduction of global capital expenditure and the clearing of industrial capacity in recent years, there is no significant increase in global molybdenum supply. According to Aetna data, the global molybdenum output in 22q1 decreased by 4.82% year-on-year. On the whole, the global molybdenum supply has tightened, and the raw material import has narrowed due to the high overseas molybdenum price. We expect that the tight supply and demand situation in China’s molybdenum market will not be changed in the short term, and the molybdenum price will remain high. The company’s main molybdenum series products are expected to benefit from the continued high price of molybdenum, and the profitability of molybdenum business may continue to improve.
Investment advice
We expect the company’s revenue from 2022 to 2024 to be 8.27/85.7/8.92 billion yuan respectively, with a year-on-year increase of 3.7% / 3.6% / 4.1% respectively; The net profit attributable to the parent company was 600 / 62 / 660 million yuan respectively, with a year-on-year increase of 21.1% / 2.8% / 7.2% respectively; The corresponding PE of the current stock price is 38x / 37x / 34x respectively, maintaining the “buy” rating.
Risk tips
The downstream demand is less than expected, the molybdenum price fluctuates violently, and the epidemic situation repeatedly affects mine production.
