I. Overview of events
Hong Kong Public Investment Co., Ltd., a wholly-owned subsidiary of Shenzhen Guangzhong Investment Co., Ltd., intends to transfer the 100% equity stake in Madagascar Central Africa Resources Holdings Limited (MADAGASCAR SINO-AFRICA RESOURCES HOLDINGS SAU) held by Central Africa Resources Holdings Limited (SINO-AFRICA RESOURCES HOLDINGS LIMTED) and sign a framework agreement. Upon completion of the equity transfer, the company will indirectly hold 100% of the shares and interests of Madagascar Central African Resources Holdings Limited (MADAGASCAR SINO-AFRICA RESOURCES HOLDINGS SAU). After the completion of this acquisition, Madagascar Central Africa Resources Holdings Limited (MADAGASCAR SINO-AFRICA RESOURCES HOLDINGS SAU) will indirectly become a wholly-owned subsidiary of the company, which in turn will indirectly control Hongqiao Mining (mainly engaged in the production and operation of Malaysia's tantalum and niobium resources).
II. Analysis and judgment
The company has set foot in 100 square kilometers of high-grade tantalum and niobium ore in Malaysia, and has obtained environmental permission to move forward in mining. Hongqiao (Africa) Mining Co., Ltd., which is indirectly controlled by the company, is mainly engaged in the production and processing of tantalum and niobium ore in Malaysia. Hongqiao Mining has obtained the relevant qualification license corresponding to the current business activities, with four exploration rights, with an exploration area of 100 square kilometers (256 square mineral grids with a side length of 625 meters). Compared with the average domestic Ta2O5 grade of not more than 0.02%, Australia and Africa grade can reach more than 20%, Malaysia tantalum mine high grade is a high probability event. In August 2012, Hongqiao Mining Industry has taken a big step towards obtaining mining rights by obtaining intermediate environmental protection permits.
Tantalum and niobium mining benefits from China's aerospace and military high-end equipment manufacturing policy dividend, comparable value of medium and heavy rare earth tantalum and niobium is an indispensable addition element in aerospace, military equipment, advanced communication base station capacitors, automobile lightweight, marine steel structure manufacturing materials. For example, 22% of tantalum is used in aerospace and military industry, 24% is used in computers and high-end communication base stations, while niobium plays an irreplaceable role in military steel, oil and gas pipe network steel, marine steel structure and automobile lightweight. And the price of metallurgical grade tantalum powder is as high as 2.5 million yuan / t, which is comparable to the price of medium and heavy rare earths, and the gross profit is amazing.
Looking forward to Hongqiao Mining Exploration report Guangdong material Experimental Inspection Center has prepared the "Angela Bay Niobium, Tantalum and uranium Mine Exploration Plan" in the Republic of Madagascar, which has started on-site work since August 2012. The first phase of the census has been basically completed and relevant reports will be submitted in the near future.
14.55 yuan per share to major shareholders and titanium concentrate underwriting to form a margin of performance safety and confidence, 500000 tons EPS is expected to reach 0.71 yuan according to the terms of the underwriting contract, we conservatively estimate the freight volume in the second half of the year at more than 100000 tons and optimistically estimate 30-400000 tons. According to the China report, the net profit of per ton ilmenite is about 320yuan (there is a price discount during the market development period), while the conservative estimate is 2012 EPS about 0.18yuan and the optimistic estimate is EPS about 0.51yuan. If the underwriting of 500000 tons of ilmenite is realized in 2013 and the net profit reaches 400 yuan per ton, EPS is expected to reach 0.71 yuan (assuming that the fixed increase is completed).
Third, profit forecast and investment suggestions
The five-year underwriting contract can still help evaluate the company in terms of relative valuation, and the bottom line of relatively safe EPS in 2013 is expected to be about 0.71 yuan (maintaining 500000 tons of titanium ore sales). Give a "highly recommended" rating.
Fourth, risk hints: 1, the contract is forced to be cancelled; 2, the extension of exploration rights and mining rights cannot be obtained.
