In 2021, the company's total operating income was 36.4 billion yuan, an increase of 57.34% over the same period last year; the total profit was 9.6 billion yuan, an increase of 280.20% over the same period last year; the net profit belonging to shareholders of listed companies was 6.1 billion yuan, an increase of 299.73% over the same period last year: the net profit belonging to shareholders of listed companies after deducting non-recurring profits and losses was 6 billion yuan, an increase of 316.04% over the same period last year.
Brief comment
The rise in product prices and the acquisition of coal mine assets have led to a big improvement in performance. Last year, both ferrosilicon and PVC rose under the pressure of double control of energy consumption, and the company acquired a 38 per cent stake in Yong Coal Mining, resulting in a big increase in return on investment.
With the imminent resumption of production, the increase in hot metal production has led to an increase in the demand for ferrosilicon. Last year, Q4 steel companies in order to achieve the annual flat control target of large-scale production reduction, Q1 Winter Paralympic Games will continue to affect production, hot metal has been hovering at a low level. It is estimated that at the end of the heating season, hot metal will rise from 10-2.2 million tonnes to 24-2.5 million tonnes, with demand rising by more than 10 per cent.
Under the conflict between Russia and Ukraine, there is a great potential for East Asian countries to transfer orders to China, bringing about the marginal growth of export demand. The annual production capacity of ferrosilicon in the world is about 11.1 million tons, and that in China is about 8 million tons, which is the largest producer of ferrosilicon in the world. In 2021, China's annual output of ferrosilicon is 5.86 million tons and exports are 550000 tons. Russia is the largest exporter outside China, exporting a total of 390000 tons in the first 11 months of last year, mainly to East Asian countries such as Japan and South Korea, which are more likely to seek more secure and stable suppliers during the war. If half of these exports were undertaken by China, demand for ferrosilicon would rise by a further 5 per cent.
The company's business can be divided into power plants and ferrosilicon plants, as well as high-quality joint-venture coal mines to enhance profitability and safety pads. Recently, downstream electricity prices have risen widely, and the electricity prices of ferrosilicon, PVC and other industries have generally increased by about 0.20 yuan. The company's own power generation is not affected at all. We can understand the company's own power plant as a thermal power plant that only sells electricity to high energy-consuming industries. The annual power generation corresponds to the electricity demand of ferrosilicon and calcium carbide PvC, which is about 850000 degrees. Due to the sale to high-energy-consuming enterprises, the excess part of the profit is calculated at 1.7 billion, totaling 1.7 billion. This part will provide a very strong safety cushion. In addition, the company's rights and interests mine 500,000 1200 million 50% = 11 million tons, which also has a very high security.
The company's coal and power plant businesses provide safe profits. Ferrosilicon business has greater flexibility under the resonant growth of domestic demand and export demand. It is estimated that the company's performance from 2021 to 2023 will be 6.1 billion, 7.9 billion and 8.4 billion, respectively, with a corresponding PE of 6.7,5.1and 4.8times. Give a rating of "overweight".
Risk hint: steel recovery is not as expected.
