\u3000\u3000 Sanxiang Advanced Materials Co.Ltd(603663) (603663)
Core view
The performance increased by 61.94% in 2021, in line with market expectations. On January 18, the company disclosed the annual performance pre increase announcement. It is expected that the net profit attributable to the shareholders of the listed company in 2021 will be about 100 million yuan to 105 million yuan, with a year-on-year increase of 54.23% to 61.94%. It is expected that the net profit after deducting non recurring profits and losses will be about 93 million yuan to 98 million yuan, with a year-on-year increase of 55.54% to 63.90%. The profit in 2021 reached a record high, in line with market expectations.
The price of zirconium series products increased significantly, boosting the performance to a record high in 2021. In 2021, the price of zirconium series products increased greatly. The current price of fused zirconia was about 42500 yuan / ton, with an annual increase of 82.8%, and the current price of sponge zirconium was about 235000 yuan / ton, with an annual increase of 61.0%. The volume and price of zirconium series products rose simultaneously, boosting the performance to a record high in 2021. As the leader of China’s zirconium industry, the company currently has a production capacity of 26000 tons of fused zirconia, leading the world in product purity. Relying on its own yangmeizhou hydropower station, the company has a significant cost advantage. At present, the production capacity of sponge zirconium is 3000 tons, accounting for about 75% of the Chinese market in 2020. The company’s fused zirconium products also supply the production of sponge zirconium, with obvious integrated cost advantage. It is expected that the price of zirconium products will remain at a high level this year, and the revenue of main products is expected to further increase.
Broaden the industrial layout horizontally, and gradually put diversified zirconium products into production. The company actively develops the layout of other zirconium series products and plans to produce 20000 tons of zirconium oxychloride. The new technology “boiling chlorination” has environmental protection and cost advantages, which may help the company successfully enter the mature market; High purity zirconia powder project has been officially put into operation and entered the production capacity release period this year; The 1500 ton special ceramics project invested through fixed raising is being actively promoted and is expected to be gradually put into operation this year and next. Diversified product layout will bring new profit growth points to the company and stabilize the leading position of zirconium industry.
Wenda magnesium aluminum will be put into operation soon, which will help the development of the company’s dual main business of “zirconium + magnesium”. At the end of 2020, the company and Contemporary Amperex Technology Co.Limited(300750) jointly funded the establishment of Wenda magnesium aluminum Technology Co., Ltd. and planned to build a 50000 T / a magnesium aluminum die casting production line. At present, the plant construction and die-casting equipment have been in place. The structural parts of lightweight battery packs are being developed, the field of magnesium alloy building temsectors and aluminum alloy lightweight ships are expanding, and the company is helping to open the dual main business development of “zirconium + magnesium”.
Investment suggestion: as the company expands the layout of zirconium products and the magnesium aluminum alloy business is about to be put into operation, the company’s performance is expected to be released gradually. The company’s operating revenue is expected to reach 1.228 billion yuan, 1.637 billion yuan and 2.082 billion yuan from 2021 to 2023, the net profit attributable to the parent company is 104 million yuan, 169 million yuan and 234 million yuan respectively, and the EPS is 54 million yuan, 0.88 million yuan and 1.22 million yuan respectively. Maintain the “buy” rating.
Risk tip: the price of zirconium products fell, and the progress of new production capacity was less than expected
