The operation is good in the first half of the year, and the company's performance has improved steadily. In 2021, H1 Company achieved an operating income of 550 million yuan, an increase of 11.94% over the same period last year, and a net profit of 114 million yuan, an increase of 490.81% over the same period last year. 2021Q2 realized revenue of 377 million yuan and net profit of 106 million yuan. The reason why the growth rate of the company's net profit is significantly higher than the revenue growth rate is that the company focuses on the selection of the main industry and development strategy, reduces the non-ferrous metals trading business with low gross profit margin, further optimizes the asset structure, and improves the profitability and sustainable development ability. In 2021, the price of H1 non-ferrous metals remained high. The price of zinc rose 6.80 percent to 22,000 yuan / ton from 260,000 yuan / ton at the end of last year, while the price of lead rose 9.59 percent to 16,000 yuan / ton from 14600 yuan / ton at the end of last year. The average spot price of 2021H1 silver was 5400 yuan / ton, an increase of 34.83% over the same period last year (the average spot price was 4005 yuan / ton). Under the condition of high lead and zinc prices, the company further focused on the main business and achieved remarkable results.
The gross profit margin of the main mine has remained high for a long time, and lead fine powder (including silver) + zinc fine powder is the "main force" of profit.
2021H1 lead powder and zinc powder contribute more than 80% of the revenue. The company has advantageous resources, adopts advanced mining technology, and its gross profit margin continues to be in the leading position in the industry. Yindu Mining has Bayern Daba silver polymetallic deposit with high resource grade, rich reserves and long service life. It is one of the mines with the highest gross profit margin among domestic listed companies, which has been maintained at about 80%. Measured by a single element, the metal reserves of silver and zinc in the mine are up to the large standard, and the metal reserves of lead are up to the medium standard.
The acquisition of Zhugongtang lead-zinc mine is carried out in an orderly manner, and the company's profits are expected to be further improved. On March 1, the company announced that it planned to buy a 72.5% stake in Guizhou Dingshengxin for 3.19 billion yuan, and its core asset was the Pig Gongtang lead-Zinc Mine. Zhugongtang lead-Zinc Mine is a large high-quality polymetallic mine in China, including 2.4606 million tons of zinc metal resources (average grade 6.74%), 813800 tons of lead metal resources (average grade 2.23%) and 592.62 tons of germanium metal resources. Through this transaction, the company's lead, zinc, germanium metal resources reserves will be greatly increased, the core competitiveness will be further improved, and the performance growth potential is huge.
Manganese sulfate monohydrate project has been completed, cut into the field of new energy to help the future business take off. The construction of the project of manganese sulfate monohydrate of Jinshan Mining with an annual capacity of 35000 tons was completed last year, and trial production was carried out in June and July this year. The company plans to further purify and produce battery-grade manganese sulfate monohydrate.
After the completion of the construction of the manganese sulfate monohydrate project, except for the production of manganese sulfate monohydrate, the recovery rates of silver, manganese and gold will be significantly improved.
Develop urban mines and create profit growth points. At the end of 2020, the company acquired 9.12% of the equity of Gold Industry Environmental Protection with its own capital of 33.5 million yuan. After the acquisition, the company held 58.12% of the shares and became the controlling shareholder of Gold Industry Environmental Protection. Gold Industry Environmental Protection currently has a disposal capacity of 100,000 tons / year of hazardous waste, which will be expanded to 200,000 tons / year. The project will produce electrolytic nickel, copper powder, ferrochromium, cobalt carbonate and rare and precious metals such as gold, silver and palladium. If the subsequent wet smelting project is successfully completed, the company will have a production capacity of 10,000 tons of electrolytic nickel and create a new profit growth point.
The output of silver has attracted much attention, and the output of the new project is expected to increase further after it is put into production. At present, the company has 6 main mines, 4 production mines, nearly 10,000 tons of silver reserves and an annual mining capacity of nearly 200,000 tons, which are respectively the Bayern Daba silver polymetallic mine of Keshiketeng Banner, which belongs to the holding subsidiary Yindu Mining Industry (900000 tons). The wholly-owned subsidiary Everbright Mining (300000 tons) and Chifeng Jindu (300000 tons) belong to Keshiketenqi and Shidi Silver-lead-Zinc Mine respectively. And the Xinbarhu right Banner Eren Tolgoi Silver Mine owned by the company's holding subsidiary Jinshan Mining (480000 tons). With the Jinshan Mining Reconstruction Project and Dongsheng Mining, Deyun Mining two projects into production. The company's silver production is expected to increase to 300 tons.
Investment suggestion: the company carries on the expansion, exploration and transfer mining and other work on the basis of the existing mines, and establishes the parallel strategy of existing mines and urban mines. With the continuous recovery of the global economy, non-ferrous metal prices are expected to remain high, while the production release of mines such as Jinshan Mining also provides support for the company's future performance. We predict that the company's EPS from 2021 to 2023 will be 0.51, 0.66, 0.76 yuan respectively, corresponding to PE26/20/17 times, and will be given the "overweight" rating for the first time.
Risk hint: product prices sharply downward capacity release lower than expected downstream demand lower than expected industry capacity release exceeding expectations