Event description
The company released the mid-year report of 2022, realizing operating income of 14.269 billion yuan, year-on-year-38.33%; net profit of 741 million yuan, + 3.94%; and deducting non-return net profit of 749 million yuan, + 11.80% of the same period last year. 2022Q2 realized operating income of 8.044 billion yuan, year-on-year-30.91%, month-on-month ratio + 29.19%; realized return-to-home net profit of 366 million yuan, year-on-year + 23.49%, month-on-month ratio-2.39%; realized deduction of non-return net profit of 297 million yuan, year-on-year + 19.57%, month-on-month ratio-34.28%.
Event comment
Metal prices soared year-on-year + trade business contracted strategically, and the company's revenue fell in the first half of the year compared with the same period last year. The company's energy metals business achieved revenue of 5.603 billion yuan, year-on-year + 37.53%: on the one hand, metal prices rose sharply in the first half of 2022 compared with the same period last year, and the average prices of SHFE copper, metal cobalt and LME nickel were + 7%, + 49% and + 63% respectively compared with the same period last year; on the other hand, with the company's CCM project put into production at the end of 2021, the company produced 197 million metal tons of nickel products, 262 million metal tons of copper and 5868 metal tons of cobalt products in the first half of 2022. In terms of annualized output, the output of copper and cobalt has increased compared with last year, while nickel is still close to full production. The company's basic metals business (mainly Sihuan zinc germanium and Huajin mining) has an operating income of 2.948 billion yuan, + 19.52% compared with the same period last year, of which the output of zinc ingots of Sihuan zinc and germanium in the first half of the year was 1.95 million metal tons. The company strategically shrank the scale of its metal trading business, with an operating income of 5.682 billion yuan,-65.76% compared with the same period last year.
The business structure has been improved and the company's profitability has been improved. 2022H1 achieved a gross profit margin of 15.25%, year-on-year + 6.21pct.
On the one hand, the company's energy and metal business capacity continues to improve, production and sales continue to grow; on the other hand, the proportion of trade business is gradually decreasing, and the company's profitability is improving. From a sub-sector point of view, the company's energy and metal business sector achieved a gross profit of 1.897 billion yuan in the first half of the year, + 13.93% compared with the same period last year, accounting for 87% of the total gross profit; the base metal plate achieved a gross profit of 160 million yuan. At the same time, the company's investment income in the first half of the year is-151 million yuan, of which the investment income of the financial assets formed by the disposal of the Group's futures transactions is measured at fair value and its changes are included in the profits and losses of the current period. About-146 million yuan. In a single quarter, the company achieved a gross profit margin of 10.60%, month-on-month-10.67pct. The average price of 2022Q2 metal cobalt fell-9% month-on-month, while the average price of copper and nickel was basically the same. The volatility of metal prices and the sharp rise in energy prices have a certain impact on the profitability of the company's in-production projects.
The company continues to promote projects under construction. Energy metal business plate: the CCM copper and cobalt project was put into production at the end of 2021; both Ke Lixin (Zhuhai) and Ke Lixin (Yangjiang) have carried out technical transformation and product research and development, with remarkable results. Technological transformation and product innovation and upgrading have upgraded the quality of their cobalt products to better connect downstream high-quality enterprises; the Youshan Nickel Project began to partially convert to low-matte nickel to match the growing demand for nickel in the field of power batteries. The company actively promotes the Congo (DRC) Kalonway mining and metallurgical integration project with an annual production capacity of 30000 tons of cathode copper and 3600 tons of crude cobalt hydroxide, which is expected to be put into commissioning by the end of 2022 to further improve the company's copper and cobalt production capacity and self-sufficiency rate. Shengmai Nickel's annual production capacity of 40,000 tons of high matte nickel project is promoted as planned. The first phase of Guizhou New Materials Project has completed the administrative examination and approval procedures such as energy assessment and environmental assessment and land formation, and has gradually carried out the project infrastructure project. Basic metals business plate: Sihuan zinc and germanium are opening up the whole process of recovering rare and precious metals such as copper, silver and indium, increasing the recovery rate of rare and precious metals to stabilize their profitability; Yunnan Hengyuan Xinmao lead-Zinc Mine and Dali Sanxin Copper-Cobalt Mine are still in the early stage of mine construction.
Upper control of resources, downward development of materials, lithium materials with raw material advantages of the rookie gradually emerged. The capacity of upstream nickel and cobalt raw materials has entered a period of rapid expansion, with a strategic focus on new energy to reduce trade business, and the layout of downstream materials of new energy, after the planning of nickel sulfate and ferric phosphate in Guizhou, join hands with Weiming, Qingshan and Xin Wanda to add the integrated layout of Wenzhou ternary cathode materials to create lithium power material production capacity with cost advantages. It is estimated that the net profit from 2022 to 2023 will be 1.46 billion and 2.31 billion respectively.
Risk hint
1. The release of supply is higher than expected and prices fall.
2. The downstream demand is lower than expected, and the sales volume of the company's products is not as expected.
