Events:
The company released the 2021 annual report, the annual revenue was 6.775 billion yuan, an increase of 100.75% over the same period last year, and the net profit attributed to shareholders was 532 million yuan (deducting 498 million yuan), an increase of 136.20% over the same period last year (168.26%). ROE (weighted) 16.18%, a substantial increase of 7.64 percentage points. The current net value is 195 million yuan, a decrease of 19.72% over the same period last year. The dividend plan for 2021 is 1 yuan (including tax) for every 10 shares.
Lead the recovery of rare earths, all sectors make concerted efforts, the company continues to improve.
During the reporting period, the company's gross profit margin and net profit margin were 15.71% and 7.99% respectively, an increase of 1.48% and 1.21% over the same period last year, and the expense rate during the period was 0.65% to 7.70%. The overall profitability increased slightly; the asset-liability ratio was 30.27%, an increase of 6.63% over the same period last year, still at a relatively low level. The current ratio and quick ratio are 1.96 and 0.67 respectively, and the debt risk is low as a whole. The cash-to-cash ratio is 109.85%, which is maintained at a good level.
During the reporting period, all business sectors of the company achieved considerable growth under the guidance of rare earth recycling business: rare earth recycling achieved revenue of 3.252 billion yuan, an increase of 206.15% over the same period last year; revenue of renewable resources processing equipment reached 1.476 billion yuan, an increase of 58.94% over the same period last year; revenue from scrap and scrap car operations reached 1.104 billion, an increase of 76.96% over the same period last year; and revenue from elevator parts reached 899 million, up 24.12% over the same period last year.
Under the background of double carbon, the demand for rare earths is improving, and the demand for new energy vehicles and industrial motors is greatly increased. China's rare earth mining and smelting capacity occupies a leading position in the world, and the global short-term supply increment mainly comes from the growth of domestic total control indicators. In 2022, the total amount control targets of the first batch of rare earth mining and smelting separation were respectively 100800 tons, an increase of 20% over the same period last year. On the demand side, the prospect of rare earth materials is good under the background of carbon neutralization. high-performance rare earth permanent magnet materials are core materials in the fields of new energy, energy saving and environmental protection: we estimate that new energy vehicles are the downstream of the largest increase in demand for rare earth permanent magnet materials, and the demand for praseodymium and neodymium is expected to reach 246,600 tons in 2025. The demand for praseodymium and neodymium for rare earth permanent magnet industrial motors is expected to reach 15000 tons in 2025. The demand for praseodymium and neodymium in wind power permanent magnet machines is expected to double to about 12000 tons in 2025.
The remarkable high growth of carbon reduction in electric furnace steelmaking determines that the scrap industry chain is expected to continue to boom. the iron and steel industry accounts for 15% of the country's carbon emissions, accounting for the largest proportion of the manufacturing industry. The carbon emission intensity of long process steel per ton steel is about 1.46t CO2/ ton steel, while that of short process electric furnace ton is 0.08.The carbon reduction effect is significant. Therefore, the development of electric furnace steel is an effective means to promote carbon emission reduction in the industry. A number of policies such as the guidance on promoting the High-quality Development of the Iron and Steel Industry encourage the development of short-process steelmaking. Scrap is the main carbon raw material for short-process EAF steelmaking, which will significantly benefit from the increase of EAF steel production capacity. In 2021, the scrap steel used in steelmaking in China is about 233 million tons, accounting for 22.56% of crude steel output. This level has much room for improvement compared with the international average level of 36%. At the same time, China has entered a high growth cycle of automobile scrap, which will also become one of the important growth points of the scrap industry chain.
Valuation analysis and rating description
It is estimated that the company's return net profit from 2022 to 2024 is 777 million, 1.044 billion and 1.344 billion respectively, corresponding to PE of 14x, 10x and 8x. The company's continuous release of rare earth recycling capacity is expected to promote sustained high performance growth and maintain the "recommended" rating.
Risk Tips:
The price of rare earth fluctuates more than expected, and the risk of poor control of gross profit margin of scrap and elevators.