\u3000\u3 Shengda Resources Co.Ltd(000603) 799 Zhejiang Huayou Cobalt Co.Ltd(603799) )
High year-on-year increase in 2022q1 performance: the company achieved a revenue of 13.212 billion yuan in 2022q1, an increase of 105.66% year-on-year and 5.53% month on month; The net profit attributable to the parent company was 1.206 billion yuan, an increase of 84.40% year-on-year and a decrease of 21.12% month on month. The gross profit margin of sales was 18.47%, with a year-on-year decrease of 2.79 PCT and a month on month decrease of 2.23 PCT.
The operation of high metal prices and the gradual increase of lithium business have helped to improve performance:
In terms of copper and cobalt products, the price of copper in 2022q1 was 71800 yuan / ton, a year-on-year increase of 14.18%, and the price of cobalt was 535700 yuan / ton, a year-on-year increase of 55.28%. In 2021, the gross profit contributed by copper and cobalt products accounted for more than 70%, which is the main source of profit of the company. Therefore, the rise of metal prices is the main reason for the year-on-year improvement of 2022q1 performance.
In terms of lithium battery cathode materials, BAMO technology merged in 2021q3, so the revenue of 2022q1 company increased the cathode material business of BAMO merged meter year-on-year. In addition, the 50000 ton ternary cathode new capacity of BAMO phase III is gradually released, which also further helps the company’s 2022q1 revenue. It is expected that its capacity will reach 93000 tons / year in the first half of 2022. In terms of precursors, Huayou new energy Quzhou will increase 50000 tons of high nickel ternary precursor project, which will be put into trial production in January 2022, bringing new increment. In terms of nickel ore in Indonesia, Huayue’s 60000 ton metal hydrometallurgy project is expected to reach production in June 2022, and Huake’s 45000 ton metal pyrometallurgy project is expected to reach production in the second half of 2022. It is expected that the performance increment of Indonesia’s nickel cobalt smelting project will be reflected in the following quarters. It is expected that from 2022, lithium battery businesses such as nickel cobalt smelting, precursors and cathode materials will significantly increase their proportion in revenue and gross profit, and constantly alleviate the impact of periodic fluctuations in metal prices on the company’s performance.
Nickel futures hedging floating loss has limited impact on performance. Due to the continuous expansion of the company’s nickel smelting scale in Indonesia, hedging is a reasonable method to prevent risks. In 2022q1, the nickel price rose sharply, and the derivative financial liabilities generated by the company’s hedging business increased by 1.463 billion yuan. If the situation of nickel mine in Russia and Ukraine is not eased, the price of nickel mine in Indonesia will be closed gradually due to the superposition of the situation of nickel mine in Russia and Ukraine. In addition, the rise in spot prices can offset some futures losses.
Cooperation to expand the scale of hydrometallurgy and strengthen the guarantee of lithium raw materials: the company announced on April 28 that it signed a cooperation framework agreement with vale Indonesia to process limonite in Vale Indonesia by hydrometallurgy, and the planned capacity is nickel cobalt hydroxide products with an annual output of no more than 120000 tons of nickel metal. This will further increase the self supply proportion of the company’s ternary precursor raw materials, so as to reduce the production cost of precursors and increase the advantages of the integrated industrial chain of lithium battery materials.
Investment suggestion: we predict that the net profit attributable to the parent company from 2022 to 2024 will be RMB 6.073 billion, RMB 7.872 billion and RMB 9.447 billion respectively, with a year-on-year increase of 55.8%, 29.6% and 20.0%. The PE value of the current stock price from 2022 to 2024 is 16, 12 and 10 times respectively, maintaining the investment rating of “buy-b”.
Risk tips: the product price has dropped sharply, the production and sales of new energy vehicles are less than expected, the release of nickel smelting capacity in Indonesia is less than expected, and there are risks of other emergencies.
