Event: the company released its annual report for 2021, with an operating income of 4.16 billion yuan in 2021, an increase of 132.81% over the same period last year. The net profit of homing in 2021 was 1.15 billion yuan, an increase of 124.13 percent over the same period last year, of which the net profit of 2021Q4 was 390 million yuan, an increase of 302 percent over the same period last year and 50 percent month-on-month growth. The non-return net profit deducted from 2021 was 1.146 billion yuan, an increase of 229.85% over the same period last year, of which 2021Q4 deducted 390 million yuan from the same period last year, an increase of 345.7% from the same period last year and 50% from the previous year. The cash dividend amount (including tax) is 503 million yuan.
The quantity and price of copper and cobalt have increased, and the cobalt gross profit margin has increased significantly. 1) Price: the average price of LME copper in 2021 was 9294 US dollars / ton, up 49.9% from the same period last year. The average price of MB cobalt is $23.98 per pound, up 54 per cent from a year earlier. 2) quantity: the company's copper production and sales were 222,600 tons, up 19.48% and 18.98% respectively over the same period last year, benefiting from the contribution of Congo Tengyuan's gradual expansion of 10,000 tons of production capacity in the fourth quarter; cobalt product production and sales rose by 62.41% and 75.47% year-on-year, mainly due to the low base of domestic production due to relocation in 2020. 3) Gross profit margin: the company has set up a factory in the Democratic Republic of the Congo (DRC), has the advantage of copper and cobalt resources channel, and can recycle low-cost resources such as low-grade cobalt, low-grade cobalt ore and secondary intermediates associated with copper ore.
The gross profit margin of cobalt and copper products in 2021 was 43.22% and 42.08% respectively, an increase of 14.93% and 3.14% over the same period last year.
The three fee rates continue to be reduced, the investment in research and development is increased, and priority lithium extraction projects are given priority to actively reserve precursors and wastes. In 2021, the company's three fees totaled 146 million yuan, an increase of 35 percent over the same period last year, and the three-fee rate was 3.5 percent, 2.5 percent lower than that of the previous year. The R & D expenditure was 112 million yuan, accounting for 2.69% of the current revenue, an increase of 173% over the same period last year. The R & D project focuses on the process of reducing cost and increasing efficiency of copper and cobalt while actively storing precursors and giving priority to lithium extraction from waste. Among them, the Ni-Co-mn ternary material precursor project for power battery and the limited lithium extraction project for battery waste (lithium recovery rate is more than 95%) are in pilot test.
Raise funds to expand green recycling smelting capacity and improve core competitiveness. According to the company announcement, in 2022, the company's cobalt salt production capacity will be expanded from 6500 tons to 20,000 metal tons, Congo Tengyuan cobalt intermediate production capacity will also reach 10,000 metal tons, and the secondary resource recovery of Tengyuan headquarters will gradually expand its production capacity; as for copper, Congo Tengyuan strives to achieve the expansion of electrowinning copper production capacity to 40,000 tons, and mine exploration strives for new breakthroughs. Take advantage of the listing of the company to speed up the start-up and construction of fund-raising projects and consolidate the leading position of cobalt salt.
Investment suggestion: we estimate that the operating income of the company 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. Maintain the "buy-A" rating with a 6-month target price of 210 yuan per share.
Risk hints: project capacity falls short of expectations; downstream demand growth falls short of expectations; macroeconomic fluctuations lead to increased risks in overseas operations