\u3000\u3000 Sunstone Development Co.Ltd(603612) (603612)
Event: on January 22, 2022, the company issued the announcement of performance increase in 2021. It is estimated that the net profit attributable to the parent company will reach 560-600 million yuan in 2021, with a year-on-year increase of 161.59% – 180.28%, deducting 560-600 million yuan of non attributable net profit, with a year-on-year increase of 167.45% – 186.55%; In a single quarter, the net profit attributable to the parent company in 2021q4 was 86-126 million yuan, down 52.7% – 30.7% month on month, with a year-on-year change (- 11.2%) – 30.0%. Deducting the net profit not attributable to the parent company of 8.913-12.913 billion yuan, down 51.4% – 29.6% month on month and 57.4% – 38.3% year on year.
Driven by both cost and market, the profit margin of prebaked anode continued to rise. Since 2020q2, the price of prebaked anode has continued to show an upward trend. According to Baichuan Yingfu, the average price of prebaked anode in 2021q4 reached 5681 yuan / ton, up 17.2% month on month. The price of petroleum coke and coal tar pitch at the core cost of raw material side increased by 8.4% and 12.0%. We estimate that the net profit per ton of prepared anode in the next four quarters will increase by about 75-311 yuan / ton. As the only leading enterprise of pre baked anode in China, the profitability of the company will improve again.
Electrolytic aluminum production reduction and capacity recovery & limited production in winter, and the supply and demand pattern of prebaked anode is expected to continue to improve. According to Baichuan Yingfu, China’s discontinued electrolytic aluminum production capacity began to resume production in December. By January 20, the production capacity was 38.01 million tons, with an operating rate of 82.33%. It is expected to maintain the rising trend of operating level in the first quarter. China’s prebaked anode capacity is concentrated in Beijing, Tianjin and Hebei, accounting for nearly 45% of China’s total capacity, of which Shandong and Henan provinces have capacity of 7.56 million tons and 2.68 million tons respectively. Over the years, in order to control air pollution in northern provinces in winter, prebaked anode enterprises generally involve shutdown and production reduction. Due to the impact of 2022 Winter Olympic Games, the scope of shutdown and production reduction is expected to expand. In extreme cases, the production in Shandong Province may be reduced by 4.05 million tons, which corresponds to the further improvement of the supply and demand pattern of prepared anode in the first quarter. Sunstone Development Co.Ltd(603612) the production bases in Shandong Province are rated as class A enterprises, with low shutdown risk. In the future, they may benefit from the upward shift of processing fees caused by the reduction of production by surrounding enterprises.
Investment suggestion: the company has become the leader of China’s prebaked anode industry. The high-quality production capacity layout ensures the scale expansion and stable production. The performance is expected to improve again in 2022. We estimate that the company’s revenue from 2021 to 2023 will be 8.91 billion yuan, 11.19 billion yuan and 14.25 billion yuan respectively, and the net profit will be 584 million yuan, 692 million yuan and 964 million yuan, and the EPS will be 1.27, 1.50 and 2.10 yuan / share, corresponding to the PE level of 15.6, 13.2 and 9.4 times respectively at the current price, maintaining the “buy” rating.
Risk warning: the supply and demand of prebaked anode market exceeds the expected change risk; The risk of unexpected changes in macro policies; The company’s new production capacity landing and subsequent planned production capacity construction are less than expected risks.
