Event
The company released its 2021 annual report on the evening of April 14, with revenue of 86.183 billion yuan in 2021, an increase of 45.42% over the same period last year, a net profit of 2.866 billion yuan, an increase of 606.09%, a deduction of 2.861 billion yuan, an increase of 520.54% over the same period last year, and an EPS of 0.0631 yuan.
Comment
The decline in the price of Q4 steel has led to losses in the steel business. In 21 years, Q4 company lost 911 million yuan in net profit, mainly due to steel production restrictions + rising raw material prices and other factors, steel prices fell sharply. In 21 years, the company produced 15.059 million tons of iron, an increase of 73300 tons over the same period last year, 16.4473 million tons of steel, an increase of 836700 tons over the same period last year, 15.4457 million tons of commodity billets, an increase of 760,700 tons over the same period last year, 1704 tons of rare earth concentrate and 1.05 million tons of fluorite. In 22 years, the company aims to produce 14.7 million tons of iron, 16.4 million tons of steel, 15.48 million tons of commercial billets, a record low ratio of iron to steel, 160000 tons of rare earth concentrate and 300000 tons of fluorite, making a new breakthrough in the comprehensive utilization of Bayan Obo resources.
With the increase in the agreed price in 22, the performance of rare earths is expected to continue to increase. In January, the company renewed the rare earth concentrate supply contract with northern rare earths, and the 22-year trading price was adjusted to 26887 yuan per ton excluding tax, with a price increase of 10618.2 yuan per ton, a range of more than 65 percent. The price of rare earths is expected to be high in 22 years, and the company uses rare earth tailings resources to develop at a low cost. It is expected to make a profit of more than 20,000 yuan per ton in 22 years. According to the 22-year production target of 160000 tons of concentrate, the profit of the company's rare earth business in 22 years is expected to exceed 3.5 billion, an increase of more than 50% over the same period last year.
Steel is expected to benefit from steady growth market expectations. Real estate and infrastructure grew steadily, and there was marginal room for improvement in demand in the second quarter, supporting the rise in steel prices. At present, the company has formed an annual output of 17.5 million tons of iron, steel, material distribution capacity, with high-grade automotive steel, high-grade household electrical appliances steel, high-grade pipeline steel, high-strength structural steel and other production capacity. The company has continued to reduce costs and increase efficiency. The manufacturing cost of 21-year-old steel processes has been reduced by 150.15 yuan per ton, a year-on-year decrease of 5%, and controllable costs and economic and technical indicators have been reduced by 1.593 billion yuan.
Profit Forecast & Investment suggestion
According to the company's 21-year performance, the 22-23 year net profit has been reduced by 48% and 38% respectively. It is estimated that the 22-24 year net profit will be 3.996 billion yuan, 4.862 billion yuan and 5.349 billion yuan respectively, corresponding to EPS 0.09 yuan and 0.12 yuan respectively, and 25 times, 21 times and 19 times of PE respectively, maintaining the "buy" rating.
Risk hint
Steel business profit decline risk; downstream demand is lower than expected.
