21H1's net profit increased by 1195.6% over the same period last year, maintaining the "overweight" rating. On August 20, the company disclosed that 21H1 realized operating income of 4.864 billion yuan, an increase of 37.1% over the same period last year, and realized net profit of 543 million yuan, an increase of 1195.6% over the same period last year, of which 21Q2 revenue was 2.51 billion yuan (qoq+6.8%) and net profit was 232 million yuan (qoq-25.2%). We estimate that the company's EPS for 21-23 years will be 0.67 EPS 0.86 Wind 0.88 yuan (the previous value 0.66 Universe 0.87), which is comparable to the company's 21-year average Wind consensus expectation PE46 times, giving the company 46 times PE (2021E), EPS (2021E) 0.67 yuan, corresponding to the target price of 30.82 yuan (previous value 22.51 yuan), to maintain the overweight rating.
The rise in volume and price of rare earth smelting products boosted the company's performance. During the reporting period, the company's gross profit margin was 20.8%, an increase of 10.4pct over the same period last year, mainly due to the overall improvement in the rare earth market and the rise in the price of the company's products. The company's 21Q2 rare earth oxides / rare earth salts / rare earth metals / zircon sand / ilmenite (containing rutile) / rare earth concentrate (including monazite), the sales volume of the company changed 27.2%, 25.3%, 11.3%, 36.0%, 89.3%, 19.2%, respectively, the gross profit margin changed 24.8pct/0.94pct/13.4pct/13.3pct/64.7pct/-18.5pct, and the volume and price of rare earth smelting products increased.
During the period, the company's comprehensive financing costs decreased, the expense rate decreased by 1.5pct compared with the same period last year, and the net cash flow generated by operating activities decreased by 1874% compared with the same period last year, mainly due to the increase in inventory reserves and the corresponding increase in accounts receivable, and fund-raising activities increased by 10.75% compared with the same period last year, mainly due to the increase in the scale of bank financing.
Speed up the construction of new projects, invest in mergers and acquisitions to help improve the industrial chain, expand the scale of production capacity during the reporting period, the company's Lianyungang zirconium-titanium mineral processing project environmental assessment was approved, Chenguang 12000 tons of rare earth metals and alloy intelligent technical transformation project, completed the main project of the plant and automatic electrolytic furnace stereotyping work; Coburi 6000 tons of rare earth metal technology transformation project and Dechang 2000 tons of rare earth metal project have started. The Lianyungang rare earth smelting separation project has completed the feasibility study and is actively carrying out the environmental impact assessment of the project; during this period, the company is actively looking for high-quality targets. By subscribing for new capital injection, it has obtained a 20% stake in Guangxi Yuxiao Xijun rare earth (5000 tons / year rare earth oxide smelting capacity), and the Hengyang Gudao new material (holding 39% equity) 5000 ton rare earth chloride project has been completed for trial production to further improve the company's industrial chain and expand production capacity.
Take advantage of the prosperity of rare earths to maintain the rating of "increasing holdings"
In view of the fact that the demand in the downstream sector of the rare earth industry is expected to continue to improve, the pattern of supply falling short of demand in the second half of 21 years may continue, the industry's high demeanor will continue, rare earth prices are expected to remain high, and the superimposed company may continue to perform well in the future. we expect the 21-23 year net profit to be 11.70bp 1.546 billion yuan (the previous value is 11.521495522 million yuan). Comparable company's 21-year average Wind unanimously expected PE46 times, giving the company a 21-year valuation of 46 times PE,21 annual EPS0.67 yuan, corresponding to a target price of 30.82 yuan (previous value 22.51 yuan), maintaining an overweight rating.
Risk tips: prices of rare earths and other products fall, affecting profitability and causing large-scale asset impairment; force majeure factors lead to raw materials can not be imported or production capacity is suspended.