Event
The company publishes its third quarter report for 2021.
The third quarterly report of 2021 officially disclosed that the total operating income was 24.232 billion yuan, an increase of 53.84% over the same period last year, and the net profit was 3.712 billion yuan, an increase of 289.01% over the same period last year. The basic EPS was 2.6 yuan, and the average ROE was 24.68%.
Brief comment
Ferrosilicon, PVC prices soared, excellent cost control ability.
The company's Q3 operating income was 9.679 billion, an increase of 24% compared with the previous month. In the third quarter, the average price of ferrosilicon market is 10032 yuan (+ 37%), the average price of PVC is 9449 yuan (+ 6%), the average price of calcium carbide in PVC is 5594 yuan (+ 20%), and the average price of caustic soda is 2517 yuan (+ 44%). The sharp increase in the price of ferrosilicon and chlor-alkali chemical products for export is the main reason for the company's revenue growth. In addition, the Qipanjing industrial zone of the company uses self-power generation, the production rhythm is basically not affected by the double control of energy consumption, and the output can be guaranteed, which is also one of the reasons for the substantial increase in revenue of the company.
The operating cost of the company's Q3 was 5.486 billion, an increase of 5% compared with the previous month. The calcium carbide needed by the company's PVC production is completely self-sufficient, and some of it can be sold out, which is not affected by the increase in the price of calcium carbide. The main costs of ferrosilicon and calcium carbide are electricity and blue carbon, so the company's cost changes mainly come from thermal coal and blue carbon. Although thermal coal rose sharply in the third quarter, the company mostly uses low-calorie coal for spontaneous power generation, and has 5 million tons of its own coal mine resources, coupled with a reasonable inventory strategy, the cost increase in the third quarter is much lower than the average market price and has less erosion on profits.
Cash acquisition of Yong Coal Mining Mining shares, a substantial increase in investment income.
At the beginning of the third quarter, Electrometallurgical Group, a subsidiary of the company, bought 25% of Yongmei Mining in cash, with a total holding of 50%. At the parent company level, it holds 39% of Yongmei Mining, which is recorded in the statement under the equity method. Yong Coal Mining has a production capacity of 12 million tons, and thermal coal prices rose sharply in the third quarter, making huge profits. The investment income included in the company's statements reached about 400 million in a single quarter.
Looking forward to the annual results, the conservative estimate is 6 billion yuan.
Ferrosilicon and PVC shot up sharply in early October. Assuming that prices remain unchanged in the later period, the unit-ton prices of Q4 ferrosilicon, PVC, calcium carbide and caustic soda are 14319 yuan, 10632 yuan, 7899 yuan and 5663 yuan respectively, up 42.73%, 12.53%, 41.20% and 124.99% from the third quarter. Assuming that the cost remains unchanged, the gross profit can be increased by another 2.35 billion tons compared with Q3, and the net profit is expected to increase by 1.5 billion yuan, then the fourth-quarter performance can reach 3.5 billion, and the annual performance is expected to reach more than 7 billion. It is conservatively estimated that prices will fall slightly in the later period, which will be the same as those in the third quarter, and the full-year results will also reach 6 billion.
Self-owned power plants offer unique advantages, and companies deserve higher valuations.
The company's two main products, ferrosilicon and PVC, are extremely high in energy consumption, with 8000 kilowatt-hours of electricity per ton of ferrosilicon and 5000 kilowatt-hours of electricity per ton of calcium carbide PVC. In the context of dual-carbon, the addition of high energy-consuming industries is very difficult, so the supply and demand environment will be more friendly. At the same time, the NDRC has opened up the floating ceiling of electricity prices for energy-intensive industries, pushing up the range of average potential costs in the industry. While the company's industrial territory has been formed, the unique advantages provided by the self-owned power plant can ensure the company's stable profits in the later stage, and the company should enjoy a higher valuation.
Profit forecast and investment suggestion: it is estimated that the return net profit of the company from 2021 to 2023 is 6.327 billion yuan, 8.26 billion yuan and 8.737 billion yuan respectively.
The corresponding PE is 7.3x, 5.6x and 5.3x, respectively, maintaining the "buy" rating.
Risk hint: the implementation of the policy is not up to expectations.
