\u3000\u3 Shengda Resources Co.Ltd(000603) 260 Hoshine Silicon Industry Co.Ltd(603260) )
Event: on April 27, 2022, the company announced that the annual report of 2021 and the first quarterly report of 2022: the company realized an operating revenue of 21.343 billion yuan in 2021, a year-on-year increase of + 137.99%; The net profit attributable to the parent company was 8.212 billion yuan, a year-on-year increase of + 484.74%; The net profit attributable to the parent company after deducting non profits was 8.176 billion yuan, a year-on-year increase of + 507.00%; The net cash flow from operating activities was 3.709 billion yuan, a year-on-year increase of + 195.69%.
In Q4 of 2021, the company achieved an operating revenue of 7.228 billion yuan, a year-on-year increase of + 172.94% and a month on month increase of + 12.71%; The net profit attributable to the parent company was RMB 3.209 billion, with a year-on-year increase of + 368.03% and a month on month increase of + 22.00%. The net cash flow from operating activities was RMB 1.302 billion, with a month on month increase of + 89.83%.
In Q1 2022, the company achieved an operating revenue of 6.390 billion yuan, a year-on-year increase of + 95.05% and a month on month increase of – 11.60%; The net profit attributable to the parent company was 2.051 billion yuan, a year-on-year increase of + 127.69% and a month on month decrease of – 36.08%; The net cash flow from operating activities was 576 million yuan, up + 90.95% year-on-year and – 55.77% month on month.
Comments:
In 2021, the operating revenue reached 21.343 billion yuan, a year-on-year increase of + 137.99%; The net profit attributable to the parent company was 8.212 billion yuan, a year-on-year increase of + 484.74%; Revenue and net profit attributable to parent increased significantly
In 2021, the company’s operating revenue and net profit attributable to the parent company increased significantly, mainly due to two reasons: 1) during the reporting period, the company’s industrial silicon capacity utilization was effectively improved, and the output increased significantly year-on-year. In 2021, the industrial silicon output was 790800 tons, a year-on-year increase of 59.79%, and the industrial silicon revenue was 8.911 billion yuan, a year-on-year increase of 131.52%; The new project of Shihezi silicone production base was put into operation, and the new production capacity was gradually released. The annual sales revenue of silicone was 12.241 billion yuan, an increase of 145.01% year-on-year; 2) Affected by factors such as changes in industry and market supply and demand, the sales volume and market sales price of the company’s main products increased significantly compared with the same period last year.
In 2022q1, the revenue and net profit attributable to parent decreased month on month, mainly due to the decline of product prices
In Q1 2022, the company achieved an operating revenue of 6.390 billion yuan, a year-on-year increase of + 95.05% and a month on month increase of – 11.60%; The net profit attributable to the parent company was 2.051 billion yuan, a year-on-year increase of + 127.69% and a month on month decrease of – 36.08%; The decrease in revenue and net profit attributable to the parent company was mainly due to the decline in the price of the company’s products; In 2022, the price of industrial silicon of Q1 company was 1846431 yuan / ton, a month on month increase of – 44.14%; The price of 110 raw rubber was 2798234 yuan / ton, a month on month increase of – 10.70%; 107. The price of raw rubber was 2699810 yuan / ton, a month on month increase of – 13.57%; The price of rubber compound was 2719797 yuan / ton, with a month on month ratio of -8.69 yuan / ton; The price of cyclosiloxane is 2862066 yuan / ton, with a month on month ratio of – 13.58%; The price of fumed silica was 2618708 yuan / ton, a month on month increase of + 5.59%.
The sales volume of industrial silicon decreased in 2021q4 and rebounded in 2022q1
The sales volume of industrial silicon 2021q4 was 89800 tons, with a chain comparison of – 44.43%; The sales volume in 2022q1 was 163400 tons, a month on month increase of + 81.91%. According to the information in the annual report, after the fourth quarter of 2021, the sharp rise of silicon price led to a sharp decline in downstream profits and even losses; The downstream began to collectively resist high priced silicon, and the market transaction was very light. The sales volume of industrial silicon of the company decreased month on month in the fourth quarter. Later, some enterprises and intermediate traders made profits and sold goods, and the silicon price fell sharply again. The downstream demand recovered, and the sales volume of industrial silicon increased month on month in 2022q1.
Improve the construction of industrial chain and give play to the synergy between upstream and downstream
On the one hand, the company continues to improve the industrial chain layout. The company has the most complete business chain in China’s silicon-based new materials industry. It is also one of the few enterprises in the industry that can produce industrial silicon and silicone at the same time, so as to form synergy. Firstly, industrial silicon ensures the supply of raw materials for the silicone business, and in turn, the silicone business ensures the stable sales of industrial silicon; On the other hand, the company has established a stable supply chain. The raw material side company purchases silicon ore and coal from suppliers in the surrounding areas of the production base, and generally signs long-term agreements with suppliers to ensure the cost advantage of raw materials; The product end company has become one of the important suppliers of Jiangxi Bluestar spark silicone Co., Ltd. Xinjiang Daqo New Energy Co.Ltd(688303) and other well-known enterprises at home and abroad. The stable supply chain relationship has laid the foundation for the continuous expansion of business.
Build a coal electricity silicon integration project and consolidate the leading position of silicon-based new materials industry
Based on the coordinated development of coal, electricity and silicon industry chain, the company has continuously improved the production capacity and market share of industrial silicon and silicone, continuously improved the downstream products of silicone, and successively started the construction of phase II of coal, electricity and silicon integration project of new material of silicone Xinjiang silicon industry, phase II of Hesheng coal, electricity and silicon integration project of industrial silicon East and Yunnan production base, A total of 1.2 million tons of industrial silicon projects and 400000 tons of siloxane and downstream deep processing projects are under construction, which are expected to be completed this year. The company will further extend the downstream deep processing product line of industrial silicon and silicone, promote the steady development of upstream and downstream integration of the industrial chain, enhance the company’s core competitiveness and expand the industry leading edge.
Attach importance to independent research and development and technology accumulation, and master the core technology of industrial silicon and silicone production in the whole industrial chain
In 2021, the company’s R & D expenditure was 555 million yuan, a year-on-year increase of + 141.85%. By the end of 2021, the company had 1265 R & D personnel, a year-on-year increase of + 253.35%. By the end of 2021, the company had obtained 147 authorized patents, including 29 invention patents, LED or participated in the formulation or modification of various standards, and published more than 20 scientific and technological articles. Through the unremitting efforts of R & D technicians, the company has obvious competitive advantages in energy consumption level, cost control, resource utilization, flexible production and product quality, has reached the leading level in China, and is gradually narrowing the gap with international well-known enterprises.
Improve capacity utilization and ensure stable production of the factory
The company made concerted efforts to overcome the external adverse effects such as the epidemic, ensure the orderly operation of local factories, further improve the capacity utilization, achieve the goal of stable and full production, and further reduce the product cost with the help of scale advantages.
Promote intelligent and information construction
Fully promote the construction of factory informatization and the transformation and optimization of production equipment automation, and realize the leap from traditional manufacturing to intelligent manufacturing; Further optimize the supplier management system and continuously reduce the procurement cost through the full implementation of centralized procurement mode.
Increase R & D investment to ensure technical advantages
Continue to increase R & D investment, improve R & D management system, promote the breadth and depth of R & D innovation platform construction, and enhance the core competitiveness of enterprises.
Give play to the synergy of industrial chain
Further extend the downstream deep processing product line of industrial silicon and silicone, promote the steady development of upstream and downstream integration of the industrial chain, enhance the company’s core competitiveness and expand the industry leading edge; Continue to adhere to the concept of “people-oriented and green development”, continuously improve the proportion of green energy, follow the policy guidance, actively promote the transformation and upgrading of silicon-based new material industry chain by using scientific research support, and make full use of the company’s existing scale advantages to meet the growing downstream industrial demand and ensure the healthy development of the industrial chain. Continuously strengthen the company’s red line awareness of safety and environmental protection and the concept of sustainable development to ensure the continuous stability of the company’s production and operation.
Ensure that the projects under construction are promoted and put into operation as planned
Promote the construction progress of the company’s major foreign investment projects as planned. Under the leadership of the company’s board of directors, the company’s management will fully coordinate relevant resources to ensure the “Yunnan Hesheng hydropower silicon circular economy project – 800000 T / a industrial silicon production and supporting Shanghai Pudong Development Bank Co.Ltd(600000) t briquette processing and production (phase I)”, “Eastern Hesheng coal power silicon integration project phase II 400000 T / a industrial silicon project” “Xinjiang silicon industry new material coal electricity silicon integration project phase II annual output of 200000 tons of siloxane and downstream deep processing project” and “Xinjiang silicon industry new material coal electricity silicon integration project phase III annual output of 200000 tons of siloxane and downstream deep processing project” were successfully put into operation.
Investment advice and profit forecast
It is estimated that the net profit attributable to the parent company in 2022, 2023 and 2024 will be RMB 9.726 billion, RMB 11.285 billion and RMB 13.631 billion respectively, corresponding to 9, 7 and 6 times of PE, maintaining the “buy” rating.
Risk warning: the risk of the project not being put into operation as expected, the risk of product price decline, the risk of product demand decline, the risk of factory safety and environmental protection production, and the risk of significant expansion of industrial capacity.
