occurrences
In 2021, the company achieved total operating income of 36.4 billion yuan, an increase of 57.34% over the same period of the previous year; total profit of 9.6 billion yuan, an increase of 280.20% over the same period last year; net profit attributable to shareholders of listed companies was 6.1 billion yuan, an increase of 299.73% over the same period last year; net profit attributable to shareholders of listed companies after deducting non-recurring profit and loss was 6 billion yuan, an increase of 316.04% over the same period last year.
Brief review
Higher product prices and the acquisition of coal mine assets have led to a significant increase in performance. Under the pressure of dual control of energy consumption last year, ferrosilicon and PVC both rose. Additionally, the company acquired 38% of Yongmei Mining's shares, and the return on investment increased dramatically.
The resumption of production is imminent, and the rise in iron water production has brought about an increase in demand for ferrosilicon. Last year, Q4 steel companies cut production on a large scale in order to achieve the goal of regular control throughout the year. The Q1 Paralympic Winter Games continued to affect production, and iron water has been hovering at a low level. It is estimated that after the heating season is over, iron water will rise from 210-2.2 million tons to the range of 2.4 to 2.5 million tons, and demand will increase by more than 10%.
Under the Russian-Ukrainian conflict, there is a high potential for East Asian countries to transfer orders to China, leading to marginal growth in export demand. The world has an annual production capacity of about 11.1 million tons of ferrosilicon, and China's production capacity is about 8 million tons. It is the world's largest producer of ferrosilicon. In 2021, China produced 5.86 million tons of ferrosilicon per year and exported 550,000 tons. Russia is the largest exporter outside of China. In the first 11 months of last year, it exported a total of 390,000 tons, mainly to East Asian countries such as Japan and South Korea. During the war conflict, Japan and South Korea are more likely to seek safer and more stable suppliers. If China undertakes half of these exports, demand for ferrosilicon would increase further by around 5%.
The company's business can be split into a power plant+ferrosilicon plant, and a high-quality joint coal mine to improve the profit safety cushion. Recently, downstream electricity prices have generally risen, and electricity prices in ferrosilicon, PVC and other industries have generally increased by about 0.2 yuan. However, the company's own power generation was completely unaffected. We can understand the company's own power plant as a thermal power plant that only sells electricity to high-energy industries. The annual power generation capacity corresponds to the electricity demand of ferrosilicon and calcium carbide PVC, which is about 850,000 kilowatts. Since sales to high-energy companies, the excess profit is calculated by 0.2, totaling 1.7 billion yuan. This part will provide a very strong safety cushion. In addition, the company's equity mine is 500+1200* 50% = 11 million tons, which also has extremely high safety guarantees.
The company's coal and power plant business provided a safe profit. The ferrosilicon business is highly elastic under the resonance growth of domestic demand and export demand. The company's performance for 2021-2023 is estimated to be 6.1 billion, 7.9 billion, and 8.4 billion. The corresponding PE is 6.7 times, 5.1 times, and 4.8 times, respectively. Give it an “increase in holdings” rating.
Risk warning: The resumption of steel production fell short of expectations.
