The TC processing fee of zinc concentrate has entered the upstream cycle, and the pure smelting performance is elastic.
Starting from the third quarter of 2018, the zinc concentrate smelting processing fee TC showed a significant upward trend, and accelerated in the fourth quarter. At present, the processing fee of domestic zinc concentrate has climbed to 7300 yuan, breaking through the high level since 2008, and the profit of the smelting industry has changed from loss to profit. The spot TC transaction of imported zinc concentrate has increased even more to US $205. the average processing fee of imported ore has exceeded the quoted price of 300 yuan for domestic ore processing. The company's zinc smelting capacity is stable and is expected to produce 310000 tons of zinc in 2019, with a capacity utilization rate of 100%. 84% of the company's revenue and gross profit come from purchased zinc concentrate smelting, the pure smelting target directly benefits from the upward TC processing fees, and the performance elasticity is more significant.
After restructuring and restructuring, the debt is reduced, the fee is reduced, the efficiency is improved, and the new students are replaced.
Through the restructuring in 2013, the company paid off 5.95 billion yuan of ordinary claims at a rate of 3.98%, solving the huge debt burden of the previous period. The company's annual financial expenses dropped from 425 million yuan to 19 million yuan the following year. After the reorganization, the operating profit and net profit increased year by year. In recent years, there is no investment in the development of large-scale production line equipment, depreciation expenses are stable, management costs remain low, and production efficiency increases steadily.
Close to the port, deep ploughing recovery, the structural advantage of imported ore is prominent.
As overseas zinc mining projects are put into production and increase production, imported mines TC will further upstream, the company's factory area is close to the port, long-term high proportion use of imported mines, obvious location advantages. Deep ploughing multi-smelting process parallel and related technologies, the recovery rate continues to rise, higher than the industry average will receive a structural dividend.
Investment suggestion: the company's performance will rebound significantly in 2019, and it is expected to achieve a gross profit of 1.15 billion yuan and a net profit of 640 million yuan. Corresponding to per share EPS 0.46 yuan, net assets per share 2.18 yuan, taking into account the gradual upward zinc processing fees, the company's recovery rate and the advantage of the use of imported ore, give the company an overweight rating, 2019 8 times PE valuation, 6-month target price 3.68 yuan.
