\u3000\u3000 Shanxi Lanhua Sci-Tech Venture Co.Ltd(600123) (600123)
The company issued the announcement of performance increase in 2021, and the main financial data are as follows:
In 2021, the company expects to realize a net profit attributable to shareholders of listed companies ranging from 2.15 billion yuan to 2.45 billion yuan, with a year-on-year increase of 473.33% to 553.33% (or 1.775 billion yuan to 2.075 billion yuan); The net profit attributable to the shareholders of the listed company after deducting non profits was 2.21 billion yuan to 2.51 billion yuan, with a year-on-year increase of 569.7% to 660.61% (or 1.88 billion yuan to 2.18 billion yuan).
In the fourth quarter of 2021, the net profit attributable to shareholders of listed companies is expected to reach 743 million yuan to 1043 million yuan, with a year-on-year increase of 472% to 702% (or 613 million yuan to 913 million yuan); The net profit attributable to shareholders of listed companies after deducting non profits was 759 million yuan to 1.059 billion yuan, with a year-on-year increase of 849% to 1224% (or 679 million yuan to 979 million yuan).
The increase in performance is mainly due to the simultaneous rise in the volume and price of major products such as coal and urea, and the impairment has a great impact on the performance.
Coal business: the pricing of the company’s coal business is market-oriented. In the fourth quarter of 2021, the average prices of Jincheng Anthracite pithead price, Linfen coking coal pithead price and Shuozhou power coal truck sector price increased by 335, 49 and 161 yuan / ton respectively compared with the third quarter, with an increase of 30%, 3% and 19% respectively. The market price continues to rise, the company’s performance continues to expand month on month, and the net profit attributable to the parent company in a single quarter increased by 4.4% – 46.5% month on month, Net profit after deduction of non-profit increased by 6.5% – 48.5% month on month.
Fertilizer business: the average ex factory price of Shanxi orchid urea was 2593 yuan / ton in the third quarter and 2589 yuan / ton in the fourth quarter, which was basically the same. In the fourth quarter, the price of urea fluctuated sharply, falling to 2250 yuan / ton at the lowest. As of January 14, 2022, it rebounded to 2510 yuan / ton again, and the profitability of the sector remained in a relatively good range.
Chemical business: the average ex factory price of dimethyl ether in Shanxi was 4611 yuan / ton in the fourth quarter, up 25% from the third quarter (3682 yuan / ton); The spot price of caprolactam in China averaged 14814 yuan / ton in the fourth quarter, down 0.5% month on month (14884 yuan / ton) compared with the third quarter, and the chemical business continued to improve. As of January 21, 2022, the prices of dimethyl ether and caprolactam have increased by 50 yuan / ton, 200 yuan / ton to 3680 yuan / ton and 14100 yuan / ton respectively compared with the end of 2021, down from the high points in the fourth quarter of last year.
Impairment and non recurring gains and losses have a great impact: in 2021, the asset impairment loss recognized by the company was about 585 million yuan, affecting the net profit attributable to the parent company was about 427 million yuan. First, Lanxing coal, a subsidiary of Lanhua Coking Coal Co., Ltd., a holding subsidiary of the company, made a provision for asset impairment of 347 million yuan, affecting the net profit attributable to the parent company by about 200 million yuan; Second, the wholly-owned subsidiary Shanxi orchid clean energy Co., Ltd. was provided with an asset impairment provision of 175 million yuan; Third, the affiliated Yanghua branch was shut down as a whole, and the company made provision for asset impairment of RMB 40 million; Fourth, the holding subsidiary Shanxi Lanhua Danfeng Chemical Co., Ltd. withdrew 23 million yuan of asset impairment reserves, which affected the net profit attributable to the parent company by about 12 million yuan. In addition, the non recurring loss recognized by the company is about 60 million yuan, which is mainly due to the scrapping of some fixed assets that have exceeded their service life and have no use value. Impairment and non recurring gains and losses affect the net profit attributable to the parent company in 2021 by about 487 million yuan. After completion, the company will go into battle light.
Profit forecast and Valuation: considering the significant fluctuation of coal price in the fourth quarter and the impact of impairment of the company, we adjusted the company’s profit forecast and predicted that the company’s net profits attributable to the parent company from 2021 to 2023 were 23 55 / 2.825/3.023 billion yuan (30.2/4.43/4.98 billion yuan in the previous time), with a year-on-year increase of 528%, 20% and 7%, equivalent to EPS of 2.06/2.47/2.65 yuan / share respectively. The current share price (11.09 yuan / share) corresponds to PE of 5.4/4.5/4.2 times respectively, maintaining the “buy” rating of the company.
Risk tips: 1) the risk of coal price falling more than expected (2) the risk that the mine under construction is put into operation less than expected. (3) Safety production risk. (4) Risk of environmental protection production restriction in autumn and winter. According to the announcement of the company, the implementation of differentiated emergency management and control measures in autumn and winter by the fertilizer company is expected to affect the company’s Dimethyl Ether output of about 30000 tons in the fourth quarter of 2021 and the sales revenue of about 90 million yuan in 2021; It is expected to affect the company’s urea output of about 120000 tons, dimethyl ether output of about 28000 tons and caprolactam output of about 17000 tons in the first quarter of 2022, affecting the sales revenue of about 530 million yuan in the first quarter of 2022.
