Make use of its own main advantages, combined with Indonesia's superior resources, to build a complete nickel-iron industry chain. In 2012, the company took the opportunity to win the bid for the Indonesian power plant project, taking the Indonesian Industrial Park project as the starting point, combined with the national "Belt and Road Initiative" development strategy, to drive the export of complete sets of smelting equipment and open up overseas markets for power equipment. Although Indonesia is rich in mineral resources, it is difficult for pure smelters to build factories directly into Sulawesi, Indonesia's largest nickel laterite producer, because of a lack of electricity. On the other hand, the company can give full play to its main advantages and set up its own power plant to supply power to the company's nickel-iron smelter, and the surplus electricity can also be sold out to other enterprises in the industrial park. At the same time, the coal mines acquired by the company can also effectively reduce the company's power generation costs. The integration mode reduces the investment risk of building a separate smelter with low cost and high efficiency.
In line with the national strategy, the Chinese and Indian governments support both sides. During the China-Indonesia Economic Cooperation Forum on March 27, 2015, the company, the Qingdao municipal government, the Indonesian central Sulawesi provincial government and relevant Indonesian investors signed an agreement on Sino-Indian government support for investment in Indonesia. This means that the company's investment projects in Indonesia are supported by the Chinese and Indian governments.
The effect of overseas layout is beginning to show, and Indonesia's performance has been realized. In 2014, the company achieved operating income of 670 million yuan, an increase of 296.56% over the same period last year, of which overseas income reached 454 million yuan, accounting for 67.79%.
Orders continue to be released and performance continues to soar. The company forecast a profit of 1.77-187 million yuan in the first half, an increase of 1058-1123% over the same period last year. The company's profit increased significantly compared with the same period last year, mainly because the large contracts signed in 2014 will continue to contribute to the company's profits, and orders are currently being executed at about 1 billion yuan. according to the production plan, the semi-annual output value has increased significantly over the same period in 2014, which will greatly increase the net profit belonging to the shareholders of the listed company.
Maintain a "buy" investment rating. The company relies on the Indonesian Nickel Iron Industrial Park project to integrate Indonesian mineral (coal, nickel) and power plant resources to create a complete nickel industry chain; at the same time, the company will take the Indonesian Industrial Park project as the starting point, continue to open up the overseas sales market of machinery and equipment business, it is expected that sales orders and sales revenue will continue to increase in 2015, and the company's performance will maintain rapid growth. According to the company's performance and project progress, the company's EPS in 2015-2016 is expected to be 1.31 yuan and 2.27 yuan respectively. Combined with the average valuation level of the nickel sector and the improvement of the company valuation level by "Belt and Road Initiative", we give the company a target price of 113.5 yuan, corresponding to 50 times PE in 2016, maintaining a "buy" rating.
Risk hint. Geopolitical risk and policy risk; exchange rate risk; project construction risk.
