\u3000\u3 Shengda Resources Co.Ltd(000603) 067 Hubei Zhenhua Chemical Co.Ltd(603067) )
Event: the company issued the annual report of 2021 and the report of the first quarter of 2022. In 2021, the company achieved a total operating revenue of 2.993 billion yuan, a year-on-year increase of 134.14%; The net profit attributable to the shareholders of the parent company was 311 million yuan, a year-on-year increase of 107.34%. In the first quarter of 2022, the company realized an operating revenue of 790 million yuan, a year-on-year increase of 18.36%; The net profit attributable to the shareholders of the parent company was 100 million yuan, a year-on-year increase of 173.25%.
After the acquisition of Chongqing Minfeng, the production and sales volume of the company increased significantly in 2021. Benefiting from the merger of Chongqing Minfeng, the company’s converted sodium dichromate production capacity reached 150000 tons in 2021, and the production and sales of main products increased significantly, helping the company’s performance increase in 2021. In 2021, the company’s dichromate sales volume was 37500 tons and its revenue was 349 million yuan, with a year-on-year increase of 88.44% and 93.53%; The sales volume of chromium oxide was 102800 tons and the revenue was 1.878 billion yuan, with a year-on-year increase of 111.52% and 139.21%; The sales volume of chromium sulfate was 26000 tons and the revenue was 103 million yuan, with a year-on-year increase of 114.88% and 123.05%; The sales volume of ultra-fine aluminum hydroxide was 23900 tons and the revenue was 81 million yuan, with a year-on-year increase of 13.81% and 21.18%; The sales volume of vitamin K3 was 2800 tons and the revenue was 173 million yuan, with a year-on-year increase of 214.22% and 212.34%.
The dividend of the industry pattern showed that the price of the company’s products rose sharply in the first quarter of 2022, and the cost transmission was smooth. As the prices of raw materials such as sulfuric acid, soda ash and lump coal continued to rise, the company raised the product price accordingly. After the integration, the company has become the world’s largest producer of chromium salt. Under the optimization of the pattern, the price rise is relatively smooth, and the cost pressure is effectively transmitted. In the first quarter of 2022, the average selling price of dichromate of the company was 1177571 yuan, with a year-on-year increase of 30.23%; The average selling price of chromium oxide was 2200756 yuan, a year-on-year increase of 33.30%; The average selling price of chromium salt co production products was 1607685, with a year-on-year increase of 77.17%; The average selling price of ultra-fine aluminum hydroxide was 404410 yuan, a year-on-year increase of 25.43%.
Multiple synergistic effects resonate, and the profitability of the company is significantly repaired. In 2021, the company’s gross profit margin was 24.96%, a decrease of 5.25 PCT compared with 2020; The company’s net interest rate is 10.42%, down 1.42pct compared with 2020. In 2021, the company’s gross profit margin and net profit margin decreased mainly because the profitability of its subsidiary Chongqing Minfeng’s main products was weaker than that of the company. After the merger, the overall gross profit margin of the listed company was affected by Chongqing Minfeng. The gross profit margin of the company in the first quarter of 2022 was 30.49%, an increase of 10.53pct compared with the first quarter of 2021; The company’s net profit margin was 12.62%, an increase of 7.11pct compared with the first quarter of 2021. After one year of continuous integration, Huangshi headquarters of the company and Chongqing Minfeng have formed synergistic effects in raw material procurement, complementary production technology and sharing of sales channels. Chongqing Minfeng’s production and operation efficiency has been continuously optimized, the profitability of the company has been significantly repaired, and the gross profit margin and net profit margin have reached the best level after the merger.
Investment advice. The company’s industry pattern showed dividends, and the production and sales of main products increased rapidly. In the future, the layout of high value-added products such as metal chromium will open up the growth space of the company. It is estimated that the company’s earnings per share from 2022 to 2024 will be 0.99, 1.19 and 1.42 yuan respectively, and the corresponding PE will be 9.6, 8.0 and 6.7 respectively, maintaining the “buy” rating.
Risk warning: chromium salt price fluctuation risk; Risk of rising raw material prices; The tightening of environmental protection pushes up the cost risk.
