Power investment energy ( Huolinhe Opencut Coal Industry Corporation Limited Of Inner Mongolia(002128) )
Event: the company released the first quarter report of 2022. In the first quarter of 2022, the company achieved an operating revenue of 7.17 billion yuan, a year-on-year increase of 24%; The net profit attributable to the parent company was 1.51 billion yuan, a year-on-year increase of 49.5%; The net profit deducted from non parent company was 1.51 billion yuan, with a year-on-year increase of 36.5%.
The first quarter performance hit a record high, far exceeding market expectations. In 2022, Q1 company’s single quarter operating revenue was 7.17 billion yuan, an increase of 24% year-on-year and 7.8% month on month; The net profit attributable to the parent company was 1.51 billion yuan, an increase of 49.5% year-on-year and 120.5% month on month. This was mainly due to the year-on-year rise in the comprehensive selling prices of coal and aluminum products and the simultaneous rise in the volume and price of power business, which promoted the rapid growth of performance; Meanwhile, the company accrued 100 million yuan of asset impairment loss in Q4 of 2021, which is too low.
Coal: the benchmark price of the long-term association has been raised, and the cost per ton of coal of the company is superior to the others. In terms of price, the benchmark price of 2022 Senior Citizens Association was raised from 535 yuan / ton to 675 yuan / ton, much higher than the same period last year and the average level. The company’s coal sales are carried out in accordance with the annual production and marketing plan and strictly implement the sales of the long-term association. Under the background of the increase of the benchmark price of the long-term association, the company’s profits will be more stable and favorable for the long-term development of good performance. In addition, the company sits on two ten million ton high-efficiency open-pit mines, and the cost per ton of coal is superior to others. Because the coal mining cost is mostly limited by resource endowment, other competitors cannot copy it. Therefore, the company has the advantage of building a natural moat with extremely low mining cost. The company’s main customers are highly dependent on the company’s products, and the company has the advantage of transportation distance and regional barriers. Under the background of the intensification of the contradiction between supply and demand in Jilin and Liaoning, the company has benefited significantly.
Electrolytic aluminum: the industry is booming, and the synergy promotes the release of performance. Huo meihongjun of the company has an electrolytic aluminum production line with an annual capacity of 860000 tons. At the same time, it has its own power plant, equipped with self provided thermal power units with an installed capacity of 1.8 million KW and 400000 kW wind power units, which can basically meet the power demand; Among them, the coal for thermal power is sold internally by the company, and the synergy benefit is remarkable. In the future, in China, the epidemic situation in production areas and environmental inspection are still the factors restricting the resumption of electrolytic aluminum production. Under the low level of social library, the demand is slightly driven, and the aluminum price is easy to rise but difficult to fall. Overseas, the escalating conflict between Ukraine and Russia has led to soaring energy prices, and a large number of aluminum plants in Europe have been forced to reduce production and stop production. Under the tightening of supply and demand, aluminum prices remain high; Russia, the largest producer of aluminum ingots in the world, will continue to be the largest producer of aluminum ingots, while the United States will further aggravate the imbalance between supply and demand.
Electric power: green power continues to advance, and production and sales grow at a high speed. As of April 2022, the company has 1.6gw of green power in operation. In addition, the company still has 1675.3mw photovoltaic, 3065.5mw wind power and 626mw scenery projects under construction and planning, with a total installed capacity of 5366.8mw, an increase of 335.4%, and great growth potential. The company plans that by the end of the 14th five year plan, the installed capacity of new energy will reach more than 7000MW. It is expected that the proportion of new energy installed capacity of the company will continue to increase and the transformation and upgrading will continue to advance.
Investment advice. The company is the leader of Mengdong lignite, with coal as the core, aluminum, electricity and new energy as the focus, and capital operation as the platform to build a comprehensive energy enterprise with core competitiveness. The company vigorously develops new wind power, green power in operation 1.6gw, under construction + planning 5GW +, and new energy transformation is ready to go. It is estimated that the net profit attributable to the parent company from 2022 to 2024 will be 5.81 billion yuan, 6.65 billion yuan and 6.98 billion yuan respectively, and the EPS will be 3.02 yuan, 3.46 yuan and 3.63 yuan respectively, corresponding to PE of 4.21, 3.67 and 3.63, maintaining the “buy” rating.
Risk tip: the production of projects under construction is less than expected, the growth rate of electrolytic aluminum consumption is less than expected, and the coal price has fallen sharply.
