\u3000\u3 Jointo Energy Investment Co.Ltd.Hebei(000600) 010 Inner Mongolia Baotou Steel Union Co.Ltd(600010) )
Events
The company released the first quarterly report of 2022 on the evening of April 27. In the first quarter of 2022, the company achieved a revenue of 20.177 billion yuan, a year-on-year increase of 15.28%; The net profit attributable to the parent company was 331 million yuan, a year-on-year decrease of 54.92%; The net profit deducted from non parent company was 323 million yuan, a year-on-year decrease of 55.31%; EPS was 0.0073 yuan, a year-on-year decrease of 37.61%.
Commentary
Q1 performance turnaround month on month. The net profit attributable to the parent company of 21q4 lost 9.11 yuan, and 22q1 turned loss into profit. Steel business: the sales volume of sectors decreased by 11% and the average price decreased by 5.86%; The sales volume of wire and bar decreased by 18.43% and the average price decreased by 0.79%; The sales volume of profiles decreased by 2.33% and the average price decreased by 6.24%; The sales volume of pipes increased by 15.69%; The average price decreased by 1.38%. Rare earth business: the sales volume of rare earth concentrate is 55000 tons, with a revenue of 1.674 billion yuan and an average price of 30400 yuan / ton, an increase of 63% over 21 years. The company uses tailings for development and has a low cost. It is estimated that the net profit of Q1 rare earth business is about 1 billion yuan. Therefore, the rare earth business of Q1 company benefited from rising prices and high profits. The steel business is expected to remain at a loss, but the loss is reduced month on month.
The trading price of concentrate increased by 65%, and the annual rare earth performance increased significantly. In January, the company renewed the rare earth concentrate supply contract with China Northern Rare Earth (Group) High-Tech Co.Ltd(600111) and the transaction price in 22 years was adjusted to 26887 yuan / ton excluding tax, with a price increase of 106182 yuan per ton, a range of more than 65%. The price of rare earth is expected to remain high in 22 years. The company uses rare earth tailings resources to develop at a low cost. It is estimated that the gross profit per ton in 22 years will exceed 20000 yuan per ton. According to the target of 160000 tons of concentrate produced by the company in 22 years, the profit of the company’s rare earth business in 22 years is expected to exceed 3.5 billion, with a year-on-year increase of more than 50%.
Steel demand is expected to improve marginally, and profits are expected to stabilize and rebound. Real estate and infrastructure grew steadily, and there was marginal room for improvement in demand in the second quarter, supporting the upward rise of steel prices. At present, the company has formed the supporting capacity of iron, steel and materials with an annual output of 17.5 million tons, and formed the production pattern of four high-quality lines of “sector, pipe, rail and line”. The resource advantage of symbiosis between iron and rare earth in Bayan Obo mine has created the company’s unique product characteristics of “rare earth steel”. At present, the company has the production capacity of high-grade automobile steel, high-grade household appliance steel, high-grade pipeline steel, high-strength structural steel and so on.
Profit forecast & investment suggestions
It is estimated that the net profit attributable to the parent company in 22-24 years will be 3.996 billion yuan, 4.862 billion yuan and 5.349 billion yuan respectively, the corresponding EPS will be 0.09 yuan, 0.11 yuan and 0.12 yuan respectively, and the corresponding PE will be 25 times, 21 times and 19 times respectively, maintaining the “buy” rating.
Risk tips
Risk of profit decline in iron and steel business; Downstream demand is lower than expected.
