\u3000\u3 Jointo Energy Investment Co.Ltd.Hebei(000600) 295 Inner Mongolia Eerduosi Resources Co.Ltd(600295) )
Events
Inner Mongolia Eerduosi Resources Co.Ltd(600295) released the report for the first quarter of 2022: the operating revenue in the first quarter of 2022 was 9.56 billion yuan, a year-on-year increase of 41.5%; The net profit attributable to shareholders of listed companies was 1.34 billion yuan, a year-on-year increase of 94.5%.
Comments:
Q1 profit hit a record high in the same period: the net profit attributable to the parent company in the first quarter of 2022 reached 1.34 billion yuan, with a year-on-year increase of 94.5%, and the revenue and net profit reached a record high in the same period.
The price of ferrosilicon continues to rise, and Q2 is profitable or better: ferrosilicon, as an important profit source of the company, has high price elasticity. By the end of April 2022, the price of ferrosilicon futures had recovered to about 10000 yuan / ton, an increase of 26% over the beginning of the year. At the same time, it was accompanied by a sharp decline in inventory. At the end of April 2022, the social inventory of ferrosilicon fell by 50% year-on-year. We believe that behind it is the rapid improvement of industry supply and demand: 1) the conflict between Russia and Ukraine led to the gap between global ferrosilicon supply and demand in the past month, which led to the growth of China’s ferrosilicon export. From January to March, the export of ferrosilicon increased by more than 100%; 2) The output of demand side steel mills will gradually resume production. Based on the horizontal control of steel output throughout the year and the bottleneck of ferrosilicon monthly output returning to more than 500000 tons, we judge that the subsequent supply and demand gap is still obvious or even further expanded, ferrosilicon price will further strengthen, and the Q2 performance of the company is expected to fully benefit from the high performance elasticity brought by ferrosilicon price rise.
Resource attribute may be ignored: the company can provide coal by itself to ensure profitability. In 2021, the company added 25% equity of Yong Coal Mining Co., Ltd., and the company controlled a total coal equity production capacity of nearly 11 million tons, which can basically realize self supply of coal. When the coal price remains high, the profitability of the company will be fully guaranteed.
Capacity replacement and efficiency improvement. The company plans to invest 2.5 billion yuan and 450 million yuan respectively with its own funds to invest in the construction of ferrosilicon alloy innovation project and homologous chemical calcium carbide project; After this replacement, the annual capacity of siliceous iron ore hot furnace and closed calcium carbide furnace is 461200 tons and 232100 tons respectively. The above two projects are expected to be completed and put into operation by the end of 2023. We believe that the above two projects will effectively improve the production efficiency of the company.
Strong performance, high dividend and high-quality blue chip: the net profit attributable to the parent company increased significantly in 2021, which has achieved continuous growth from 2016 to 2021, and the CAGR in six years is as high as 70%; And it is a rare enterprise in the industry, with growth in 2021q4. The dividend ratio of the company in 2021 is as high as 47%, and the dividend yield is as high as 7%. Since its listing, the company has paid dividends every year, with an average dividend ratio of more than 20%.
Profit forecast and investment rating: we predict that the company’s revenue from 2022 to 2024 will be 45 / 490 / 46 billion yuan, with a year-on-year growth rate of 23% / 9% / – 6%; Based on the company’s performance, we adjusted the net profit attributable to the parent company from 9 / 10 / 9.5 billion yuan to 8.5 / 9 / 9.2 billion yuan from 2022 to 2024, with a year-on-year growth rate of 40% / 6% / 3%; The corresponding PE is 5.5/5.2/5.1x respectively. Considering that the company’s performance is expected to continue to improve, with both resource attributes, low valuation and high dividends, maintain the company’s “buy” rating.
Risk tip: price fluctuation and cost fluctuation of ferrosilicon.
