Event
The company released its 2021 semi-annual report on August 30, with an operating income of 14.553 billion yuan in the first half of the year, an increase of 45.24% over the same period last year, and a net profit of 1.57 billion yuan, an increase of 269.33% over the same period last year.
Comment
Q2 performance is in line with expectations. The company Q2 achieved a net profit of 880 million yuan in a single quarter, an increase of 183.29% over the same period last year and 27.54% month-on-month growth, and the performance was in line with expectations. In the first half of the year, the company produced 1.6033 million cashmere garments; electric power metallurgical and chemical plate produced 754300 tons of clean coal; 731400 tons of ferrosilicon, 133000 tons of silicon and manganese; 900800 tons of calcium carbide, 327,000 tons of caustic soda, 10,000 tons of PVC50.49, 288,000 tons of chemical fertilizer, 3352 tons of cement and 5043.13 tons of polysilicon. The average gross profit in the first half of the year was 33.18%, an increase of 4.51pcts over the same period
The price increase of PVC helped the company's performance pick up. After the completion of the second phase of PVC in 2020, the company has a production capacity of 800000 tons of PVC and 1.6 million tons of calcium carbide. Due to the increase in downstream demand, PVC prices have fluctuated upstream since the first half of 2021, and domestic PVC ton prices fluctuated in an upward range of 9000 yuan at the end of August.
The "double control" in Ningxia, Inner Mongolia leads to the shortage of calcium carbide raw materials. The export situation caused by plant parking is good, the domestic autumn maintenance continues, the social inventory is good, and some foreign production capacity is stopped, and other reasons to maintain PVC prices are easy to rise and difficult to fall.
The price of ferrosilicon in the context of carbon neutralization is expected to benefit in the long run. The ferroalloy in Inner Mongolia has been forced to shut down the backward production capacity by means of electricity price adjustment. At present, Baotou and Wulanchabu have shut down production capacity accounting for nearly 8% of the country's monthly output. Referring to the fact that Ningxia shut down capacity accounted for 15% of the country in 2017, the price rose from 6000 yuan / ton to 12000 yuan per ton in March. It is expected that the price center of ferrosilicon will move up to 7500-8000 yuan / ton in 2021. If the phase-out policy in Inner Mongolia and other places is well implemented, it is expected to continue to promote the price of ferrosilicon. The company has an annual production capacity of 1.6 million tons of ferrosilicon, accounting for 30% of ferrosilicon production and sales, ranking first in the country; the power cost accounts for about 60% of ferrosilicon production cost, and the company's own coal supply and self-provided power plants have significant advantages in operating costs. Ferrosilicon products have been estimated that every 100 yuan increase in price corresponds to a profit of 106 million yuan, which shows great flexibility in performance.
Profit Forecast & Investment suggestion
It is estimated that the return net profit of the company from 2021 to 2023 is 3.399 billion yuan, 3.44 billion yuan and 3.446 billion yuan respectively, the EPS is 2.38,2.41,2.41 yuan respectively, and the corresponding PE is 8.37,8.27,8.26 times respectively, maintaining the "buy" rating.
Risk hint
The failure of ferrosilicon capacity removal policy to meet expectations led to sharp price fluctuations; the pledge rate of major shareholders was on the high side.
