\u3000\u3000 Yunnan Tin Co.Ltd(000960) (000960)
Event: on January 23, 2022, the company issued the announcement of annual performance increase in 2021. It is estimated that the net profit attributable to the parent company in 2021 will be RMB 2.7 billion to RMB 2.9 billion, with a year-on-year increase of 291.08% to 320.05%, deducting the net profit not attributable to the parent company from RMB 2.75 billion to RMB 3 billion, with a year-on-year increase of 351.93% to 393.01%. In a single quarter, Q4 achieved a net profit attributable to the parent company of 904 million yuan to 1.104 billion yuan, with a year-on-year increase of 287% to 373% and a month-on-month increase of 8% to 32%. The performance exceeded the consensus expectation of wind.
Comments: the volume of the company’s main products is stable, but the prices rise together, driving the substantial growth of performance.
① in terms of volume, the company achieved 252200 tons of non-ferrous metal output in the first three quarters, 81.61% of the annual plan, and the output of tin ingot / cathode copper / zinc ingot / indium ingot was 6.06/8.74/101500 tons and 53.26 tons respectively. The output of major products such as tin, copper and zinc of Q4 company is expected to remain stable in 2021.
② in terms of price, the prices of major metal varieties of Q4 company increased year-on-year and month on month in 2021. The average price of tin ingot was 291300 yuan / ton, with a year-on-year increase of 97.47% and a month on month increase of 19.54%; The average price of cathode copper was 70500 yuan / ton, an increase of 29.24% year-on-year and 1.55% month on month; The average price of zinc ingot was 23700 yuan, a year-on-year increase of 14.73% and a month on month increase of 4.75%.
③ in terms of costs and expenses, the company is committed to the control of costs and expenses, and has overcome multiple challenges such as regional power restriction, rising prices of raw materials and accessories and drastic changes in supply.
④ competitive advantage: through reform and innovation, the company has improved its production technology, and the efficiency of deep processing business has increased significantly. Under the coordination and linkage of the whole tin industry chain and supply chain, the company’s market influence has increased and its market share has further expanded (in 2020, the company’s tin metal market share in China was 47.70% and the global market share was 22.58%).
⑤ disposal of inefficient assets: Chenzhou Mining and metallurgy, a wholly-owned subsidiary, has been at a loss for a long time (a loss of 128 million yuan and 1.61 million yuan respectively in the first half of 2020-2021), which is expected to form part of the asset impairment, but reduces the “bleeding point” in the future, which is conducive to the future development of the company.
Future core highlights: the company is a leader in the tin industry, with internationally leading complete sets of tin mining, beneficiation, metallurgy and deep processing technologies and a complete industrial chain. At the same time, it has rich tin, copper, zinc and indium resources and excellent resource endowment.
① as of the first half of 2021, the company has a tin smelting capacity of 80000 tons / year, a tin material capacity of 41000 tons / year, a tin chemical industry capacity of 24000 tons / year, a cathode copper capacity of 125000 tons / year, a zinc smelting capacity of 100000 tons / year and an indium smelting capacity of 60 tons / year. It has the ability to convert resource advantages into output advantages.
② at the same time, the industry supply and demand pattern of the company’s main metals is improving, and the price is expected to maintain a stable upward trend. The company will fully benefit from the rise in the price of various metals, and the profit is expected to continue to rise.
Investment suggestion: the company is a leading enterprise in the tin industry, with excellent resource endowment and the advantage of industrial chain integration. Under the expectation that the tin price will rise in the future, the company’s performance will be thickened. We expect that the net profit attributable to the parent company from 2021 to 2023 will be RMB 2.747/38.45/4.029 billion, corresponding to the closing price of RMB 22.25 on January 21, 2022, and the PE from 2021 to 2023 will be 14 / 10 / 9 times. The company will be given a “recommended” rating for the first time.
Risk tip: risk of large price fluctuation of tin, zinc and copper; Financial risks; Downstream demand was lower than expected.
