\u3000\u3 Jointo Energy Investment Co.Ltd.Hebei(000600) 295 Inner Mongolia Eerduosi Resources Co.Ltd(600295) )
Events
The company released the first quarterly report of 2022 on April 29. In the first quarter of 2022, the company achieved a revenue of 9.564 billion yuan, a year-on-year increase of 41.47%; The net profit attributable to the parent company was 1.343 billion yuan, a year-on-year increase of 94.45%; The net profit deducted from non parent company was 1.313 billion yuan, with a year-on-year increase of 92.75%; EPS is 0.94 yuan.
Commentary
Q1 performance fluctuates with product prices. Q1 company’s net profit attributable to parent decreased by 43.55% month on month; The comprehensive gross profit margin was 26.6%, with a month on month decrease of 5.95 PCTs; The net interest rate was 19.21%, down 6.9pcts month on month. The average price of PVC in Q1 market was 884914 yuan / ton, down 11.46% from Q4. The average price of Q1 ferrosilicon (75 silicon, Inner Mongolia) is 9238 yuan / ton, down 23.9% from Q4. Since April, with the resumption of ferrosilicon production by steel mills, the price has increased slightly. Considering the increase in ferrosilicon export demand caused by the conflict between Russia and Ukraine during the year, the price is expected to remain high, and the performance elasticity of ferrosilicon is expected to appear.
Pay attention to the realization of export logic brought by Russian ferrosilicon transfer. Russian ferrosilicon exports are mainly concentrated in East Asia, Japan and South Korea. The monthly demand for ferrosilicon in Japan and South Korea is about 55000 tons, half of which comes from Russia. With the escalation of the conflict between Russia and Ukraine, it is judged that most of this demand will be transferred to China, which will bring about a demand increment of about 4% per month. In March, China exported 76500 tons of ferrosilicon, an increase of 72.35% month on month; The average export price was US $216109/ton, with a month on month increase of 12.5%. The ferrosilicon export logic began to be realized gradually.
It is proposed to invest in the capacity replacement project of the electric metallurgy and chemical industry park. The company’s subsidiary, dianye group, plans to invest 2.5 billion yuan to build a silicon alloy innovation plant project with the existing 48 silicon iron ore furnaces of Xijin mining and metallurgy, its wholly-owned subsidiary, with a total capacity of 615000 tons / year. Following the principle of increasing the large and reducing the small, it plans to replace the capacity in a ratio of 1.25:1: it plans to build 1045000kva silicon iron ore furnaces, equipped with 2 25MW waste heat power generation and 240500kva silicon iron ore furnaces with a capacity of 461200 tons / year. Dianye Metallurgical Group holds 46% of the company’s shares. Congeneric chemical uses the existing 6 closed calcium carbide furnaces with an annual production capacity of 295900 tons. It plans to upgrade to 260000kva closed calcium carbide furnaces with an annual production capacity of 232100 tons through technical transformation.
Profit forecast & investment suggestions
According to the company’s performance in the first quarter of 22 years, the revenue of 22-23 years will be increased by 8% and 8%. It is estimated that the net profit attributable to the parent company in 22-24 years will be 6.166 billion yuan, 6.274 billion yuan and 6.336 billion yuan respectively, with corresponding EPS of 4.32 yuan, 4.39 yuan and 4.44 yuan respectively, and corresponding PE of 7 times, 6 times and 6 times respectively, maintaining the “buy” rating.
Risk tips
Ferrosilicon’s capacity removal policy did not meet expectations, resulting in sharp price fluctuations; The pledge rate of major shareholders is high.
