\u3000\u3000 Henan Shenhuo Coal&Power Co.Ltd(000933) (000933)
Event: on January 21, 2022, the company issued the announcement of annual performance increase in 2021. It is estimated that the company’s net profit attributable to the parent company in 2021 will be RMB 3.107 billion, with a year-on-year increase of 767.04%, deducting the net profit not attributable to the parent company of RMB 3.139 billion, with a year-on-year increase of 3503.23%. In a single quarter, Q4 is expected to realize a net profit attributable to the parent company of 808 million yuan, a decrease of 3.42% month on month. The performance is in line with our expectations.
The high price of coal and aluminum raised the performance, and the impairment smoothed the profit curve.
① electrolytic aluminum business: the net profit of Q4 tons of aluminum fell month on month due to the impact of cost increase and power and production restriction. (1) Volume: limited film sales, the annual sales volume of Yunnan Shenhuo may be only about 600000 tons, and the sales plan of 800000 tons at the beginning of the year has not been completed; (2) Price: the average tax inclusive price of Q4 electrolytic aluminum was 20043 yuan / ton, down 2.37% month on month; (3) Cost: the prices of coal (Q4 + 10.85%), alumina (Q4 + 24.96%) and prebaked anode (Q4 + 17.87%) increased month on month; (4) Profit: according to our calculation, the profit per ton of aluminum in Q4 electrolytic aluminum industry was 1435 yuan, down 60.66% month on month. However, it is worth noting that the current cost side is declining rapidly. As of January 20, the average profit per ton of aluminum in January has rebounded to 4985 yuan.
② coal business: the coal price continues to rise and the profit contribution is obvious. The company’s coal products mainly include lean coal and anthracite. According to China’s average quotation, the average market price of lean coal in 2021q4 is 2193 yuan / ton, a month on month increase of + 37%; The average market price of anthracite was 2277 yuan / ton, a month on month increase of + 38%.
③ impairment shall be fully accrued, and the profit curve of 21 years shall be smoothed, which may be improved in 2022. In 2021, the company withdrew a total of 3.443 billion yuan of asset and credit impairment losses, and the net profit attributable to the parent company is expected to decrease by 2.678 billion yuan. The impairment involves coal, power plants, railways, alumina, etc., and the provision is sufficient. It may be difficult to have a large impairment in 2022.
Future core focus:
① the output of Yunnan Shenhuo may increase. Assuming that the capacity utilization rate of 750000 tons of capacity built and put into operation by the company from January to May is 70%, the resumption of production of surplus capacity and the production of new capacity will be carried out after the normal arrival of wet season in June. It is expected that Yunnan Shenhuo will produce 718600 tons of electrolytic aluminum in 2022, an increase of 17.03% year-on-year. Assuming full production throughout the year in Xinjiang, the total output of the whole company in 2022 will be 1518600 tons.
② Liangbei production expansion + Quandian increment + damoling operation, the company’s coal still has increment. The basic orientation of coal is good, and the coal price is strong, which is expected to continue to contribute to profits.
③ the 55000 ton phase I project of Shenlong Baoding double zero aluminum foil project has been officially put into operation, and the construction of phase II will be started in the near future. The certification of DPCA Baoding battery foil is expected to be completed in the first half of 2022 and is expected to enter the field of battery foil.
Investment suggestion: supply is limited, demand is driven by steady growth, and coal and aluminum are expected to maintain high prices. With the gradual promotion of the company’s resumption of production capacity in Yunnan and the production of new production capacity, there is still room for growth in the company’s output in 2022. We expect that from 2021 to 2023, the company’s net profit attributable to the parent company will reach 3.104 billion yuan, 4.865 billion yuan and 5.343 billion yuan, with corresponding EPS of 1.38 yuan, 2.16 yuan and 2.37 yuan respectively, and corresponding PE of current stock price (January 21) of 8, 5 and 5 times respectively, maintaining the “recommended” rating of the company.
Risk tip: downstream demand is less than expected, overseas electrolytic aluminum production is more than expected, coal and aluminum prices are down, etc
