Layout of Congo (Kinshasa), with copper and cobalt raw material supply advantage. The main raw materials of the company's products are copper-cobalt ore and cobalt intermediate products. The company's advantages on the supply side are:
1) the company has set up a factory in the Democratic Republic of the Congo and has the advantage of copper and cobalt resources. The Democratic Republic of the Congo (DRC) is rich in cobalt resources, accounting for about 50% of the world's reserves, and cobalt supply accounts for more than 70% of the world. In 2016, the company set up Congo Tengyuan in the Democratic Republic of the Congo as the raw material procurement base, resource development base and product initial processing base of the Democratic Republic of the Congo. In addition, at present, Congo Tengyuan has obtained two exploration rights and one mining right, in addition, it is also cooperating with GICC SARL to develop exploration minerals to further stabilize the company's raw material supply and reduce ore procurement costs. In the future, the company will further extend to upstream mine exploration and mining, speed up the development of resources, and improve the layout of the company's whole industry chain; 2) supplier resources are of high quality. The company has established a good cooperative relationship with Glencore, China Railway Resources, Wanbao Mining and other mining companies and large traders, and obtained a more stable and reliable source of copper and cobalt raw materials.
3) develop the recovery technology of diversified cobalt resources. The resources such as low-grade cobalt, low-grade cobalt ore and secondary intermediate associated with copper ore are recycled at low cost to produce high-quality cobalt intermediate products.
With cobalt and copper smelting as the core, the product market share is in the forefront of the country.
1) the expansion of cobalt and copper production capacity is accelerated, and the market share is expected to further increase: the company currently has a total cobalt salt production capacity of 6500 tons, electrodeposition copper capacity of 23000 tons, and Congo (Kinshasa) cobalt intermediate production capacity of 4000 tons of cobalt. In 2020, the company's output of cobalt salt was 4858.97 metal tons, accounting for 5.92% of the total domestic output, of which cobalt sulfate accounted for 6.37% and cobalt chloride accounted for 5.53%, ranking fifth in the country. This time, the company plans to raise 2.2 billion yuan, of which 1.7 billion will be used to further expand domestic and foreign copper and cobalt production capacity, eventually realizing 60,000 tons of electrodeposited copper and 10,000 tons of cobalt intermediate products in the Democratic Republic of the Congo; and domestic production capacity of 20,000 tons of cobalt, 10,000 tons of nickel and 3200 tons of copper. The scale of the company is further expanded, and the share of cobalt salt market is expected to further increase.
2) the company's product quality is stable and reliable, and the customer structure is excellent: the company's two core products are cobalt chloride and cobalt sulfate. With the leading quality, it has established a long-term and close cooperative relationship with Dangsheng Technology, Zhongwei shares, Xiamen Tungsten Industry, Green Mei, Shanshan shares, Jinchuan Technology and other precursor leading enterprises.
Cobalt and copper contribute mainly to income and gross profit, and the fluctuation of cobalt price has a great impact on the company's performance. In the past two years, the total revenue of copper and cobalt products accounted for more than 96% of the company's revenue. In recent years, with the steady increase in the average price of copper, superimposed Congo Tengyuan put into production and expansion, copper plate revenue and gross profit level improved. The price of cobalt products fluctuates greatly, which has a great impact on the company's performance. In 2019, the cobalt price was at the bottom of the cycle, the gross profit margin of the company's cobalt products fell to 16.8%, and the gross profit ratio dropped to 44.7%.
Cobalt and copper prices may remain high, and the company's high performance growth is expected to be maintained. For cobalt, according to CRU,2021, the global cobalt supply is about 160000 tons, an increase of 13% over the same period last year, and the demand is 174000 tons, an increase of 27% over the same period last year. Cobalt products are in short supply. The supply increment is expected to come from by-products of Congo gold and Indonesian nickel and cobalt intermediate in 2022, but the pace of supply release is disturbed or lower than expected by the epidemic, demand is steadily driven by the recovery of traditional consumer electronics and new energy vehicles, and the supply and demand side remains tight. Cobalt prices may remain high. In terms of copper, according to woodmackenzie,2021 's annual global copper production of about 24.58 million tons, an increase of 3.5% over the same period last year, and demand for 24.45 million tons, an increase of 4.1% over the same period last year. Supply and demand are in tight balance.
In 2022, the global economy will accelerate its recovery in the post-epidemic stage, stable growth policies will stimulate infrastructure, power grids and real estate consumption, new energy copper foil demand will contribute to a remarkable growth rate, traditional and new energy sectors will work together to promote copper consumption, and copper prices are expected to remain high.
Investment suggestion: we estimate that the company's operating income from 2022 to 2024 will be 65.3,93.9 and 12.09 billion yuan respectively, and the net profit will be 17.7,25.5 and 3.27 billion yuan respectively, and the corresponding EPS will be 14.05,20.24,25.97 yuan per share respectively. Give a "buy-A" rating for the first time, with a 6-month target price of 210 yuan per share.
Risk tips: the company's fund-raising project production capacity is not as expected; the downstream demand growth of copper and cobalt is not as expected; the industry new capacity is put into production too fast, and the industry competition is intensified; macro