Events: Baotou Steel Co., Ltd. reported that 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, and 1704 tons of rare earth concentrates. produce 1.05 million tons of fluorite. The operating income was 86.183 billion yuan, an increase of 45.42% over the same period last year; the net profit belonging to shareholders of listed companies was 2.866 billion yuan, an increase of 606.09% over the same period last year.
The company's rare earth mineral reserve output ranks first in the world. The company has Bayan Obo mine tailings reservoir, resource reserves of 197 million tons, average rare earth oxide grade of 7%, rare earth oxide reserves of about 13.82 million tons.
The company has mining rights in the west mine of Bayan Obo Mine, with rare earth oxide reserves of about 10.4 million tons. Through the exclusive Ore supply Agreement signed with Baotou Iron and Steel Group, the company has the exclusive right to purchase Bayan Obo's main east ore resources, equivalent to 30.7% of the main east mine rare earth oxide share, a total of 10.745 million tons. The company is expected to have a total of 34.965 million tons of rare earth oxide reserves. The company's rare earth concentrate output exceeds 50% of the country, and is the world's largest supplier of rare earth upstream resources.
The rare earth concentrate has entered the period of price increase. Because of the upstream and downstream relationship between the company and the related company, the company only sells rare earth concentrate to the north rare earth, and the company and the north rare earth agreed to adjust the rare earth concentrate price according to the market situation. The latest sales price of rare earth concentrate in 2022 is 26887.2 yuan per ton (REO=51%). The total trading volume of rare earth concentrate will not exceed 230000 tons in 2022. The company's net profit of rare earth business is expected to increase significantly in 2022.
Iron and steel business is growing steadily. The company has an annual output of 17.5 million tons of iron, steel, materials supporting capacity, the overall equipment level has reached the international first-class, forming a "plate, pipe, rail, line" four major product production pattern.
The production capacity of plate, pipe, profile and bar is 9.7 million tons, 1.7 million tons, 2.1 million tons and 3.2 million tons respectively. The company has a production capacity of 8 million tons of coke to provide protection for iron and steel production.
Investment suggestion and rating: the company's operating income from 2022 to 2024 is estimated to be 815.26 RMB 872.53 / 89.74 billion, and the net profit returned to its mother is 48.65 RMB 68.54 RMB 8.33 billion respectively. Considering that the increase in downstream rare earth demand has pushed up the related transaction price of the company's rare earth concentrate, the company has huge rare earth oxide reserves, giving the rare earth business 35 times PE and the steel business 5 times PE. The company has a reasonable valuation of 152.28 billion yuan in 2022, which is 49.8% room for the current market capitalization and maintains the company's "buy" rating.
Risk hints: sales of new energy vehicles and wind power installations are lower than expected, resulting in lower-than-expected rare earth prices; steel capacity expansion exceeds expectations, and steel supply increases lead to the risk of steel prices falling.
