The company is a national green mining enterprise with large reserves of lead and zinc resources, good occurrence state and resource endowment advantage. The company is mainly engaged in the mining and trading of non-ferrous metals, the main products include zinc concentrate, lead concentrate (containing silver) and so on. The company has 2.1512 million tons of zinc metal resources, 637700 tons of lead metal resources and 1162.19 tons of silver metal resources. At present, the company has obtained two mining rights, with a total mine production capacity of 1.5 million tons / year. The company has been awarded as the first batch of green factories, national green mines and national high-tech enterprises. It is one of the top ten leading enterprises in the green development of non-ferrous metals industry and a national green mine model enterprise established by the Ministry of Natural Resources.
The company's operating income is increasing year by year, and its profitability is good. The company's revenue increased from 624 million yuan in 2018 to 1.252 billion yuan in 2021, with a CAGR of 26.3%. The company's comprehensive gross profit margin in 2020 was 69.74%, higher than the comparable average of 55.51% for companies in the same industry. From 2019 to 2021, the company's R & D expenditure increased from 24.4183 million yuan to 43.0037 million yuan, making the company's comprehensive recovery of lead, zinc and silver in the domestic advanced level. From 2018 to 2021, the net profit of returning to the mother increased year by year, from 30 million yuan in 2018 to 463 million yuan in 2021, with CAGR of 149.0%.
Upstream zinc and lead supply contraction, downstream infrastructure and other areas may pull zinc and lead demand growth. The supply end of upstream zinc-lead concentrate is affected by environmental protection, epidemic situation and other factors, and the output has decreased in recent years. The primary consumption fields of zinc in China are galvanizing, die-casting alloy, etc., and the largest proportion of galvanizing consumption and construction is 50%. In the context of steady domestic growth, downstream infrastructure and other areas may boost the demand for zinc. Lead resources are mainly used in lead-acid batteries, involving communications, transportation and other fields. In 2020, the output of lead-acid batteries in China increased by 12.55% compared with the same period last year. High ownership of electric bicycles and cars will support lead consumption, while 5G base stations and energy storage may drive demand growth. From 2018 to 2022, the price of domestic zinc concentrate increased significantly, and the price of lead concentrate adjusted slightly.
Fund-raising projects: transform the existing production system, increase production capacity, and strengthen mine exploration. The company raised 1.306 billion yuan to carry out the upgrading project and production exploration project of Guojiagou lead-Zinc Mine in Huixian County. After the completion of the upgrading project of Guojiagou lead-Zinc Mine, the average annual output of zinc concentrate and lead concentrate (containing silver) will be increased by 3706.94 tons and 873.65 tons respectively by improving metal recovery. At the same time, the company will increase geological exploration in Guojiagou lead-Zinc Mine. It is expected that 17 million tons of ore, 441700 tons of zinc metal, 142500 tons of lead metal and 270.53 tons of silver metal can be found to control the amount of resources + inferred resources.
Investment suggestion: we estimate that the revenue of Jinhui shares in 2022-2024 will be 14.39cm 16.08 / 1.77 billion yuan respectively, and the net profit of return to the mother will be 859 million yuan respectively. It is estimated that the CAGR of the company's EPS in 2021-2023 will be 27%. At the same time, considering that the company has large reserves and good occurrence of lead and zinc resources, the production capacity will be further increased in the future. in addition, the amount of ore and metal that can be detected and controlled + inferred resources will increase, and the company will grow and cover for the first time, and will be given a "cautious recommendation" rating.
Risk hints: the risk of price fluctuation of non-ferrous metals; the risk of mine resources reserves; the risk of a large gap between the mining plan and the actual results; the risk of differences between the results of resource reserves exploration and the actual situation; the risk of production safety; the risk of natural disasters.
