Hengbang shares disclosed that in the third quarter of 2020, the company's 2020Q1-Q3 achieved operating income of 28.338 billion yuan, an increase of 37.4% over the same period last year; net profit of 217 million yuan, down 14.39% from the same period last year; and non-net profit of 419 million yuan, up 53.6% from the same period last year. Of this total, the operating income of Q3 was 11.892 billion yuan, up 55.73% from the same period last year and 57.58% from the previous year; the net profit from the home was 83 million yuan, down 22.38% from the same period last year and 88.63% from the previous year; and the non-net profit from the mother was 449 million yuan, up 169.21% from the same period last year and 73.36% from the previous year.
Smelting business strength, volume and price rise, driving the rapid growth of business income. During the 2020Q3 period, the average price of comex gold rose 29.53% year-on-year, 11.32% month-on-month. During the same period, the company raised the prices of major products, and sales increased significantly compared with the same period last year. The strength of the smelting business led to a 55.73 year-on-year increase in Q3 operating income and a 57.58% month-on-month increase.
Q3 deduction is not a new high, fair value changes in net income to reverse losses, but the decline in investment income is a drag on the current performance. The net profit of the company's 2020Q3 belonging to the parent company reached a record high of 449 million yuan since listing. And during the reporting period, the net income of fair value changes changed from-100 million yuan of Q2 to profit of 22 million yuan. However, the further decline in investment income has a drag on the performance of Q3, among which, the investment income of Q3 has dropped significantly to-457 million yuan, a further decline of 302 million yuan compared with Q2, which is a drag on Q3 performance. We think it may have something to do with hedging.
The construction project of boundary expansion and capacity expansion of Liaoshang Gold Mine is expected to be invested in construction, and the self-financing rate will be increased by more than 8%. The construction project of boundary expansion and capacity expansion of Liaoshang Gold Mine is expected to invest in construction. The construction scale of the mine is 900,000 tons per year (with a service life of 20 years). After the project is completed and put into operation, the annual sales income will be increased by 530 million yuan and the profit will be 240 million yuan. It is estimated that the company's self-produced gold output will increase by 3.6 tons, and the self-financing rate will increase by more than 8%.
Marching into new semiconductor materials is expected to break the overseas monopoly. Relying on the existing purification technology, the company tries to improve the industrial chain and break the overseas monopoly of some high-purity metals. In March 2020, we started to build the R & D and industrialization project of high-purity materials, and officially entered the field of new semiconductor materials. Hengbang High Purity New Materials Co., Ltd. has invested 340 million yuan to build four production lines with an annual output of 50 tons of high-purity arsenic, 50 tons of high-purity antimony, 50 tons of high-purity bismuth and 20 tons of high-purity tellurium in Muping District of Yantai City. By the end of September, the civil engineering main project of the high purity arsenic production line and the installation of equipment and electrical instruments had been completed.
It is expected that after the full capacity is put into production, the annual sales income will increase by 100 million yuan, breaking the lack of some high-purity core materials in our country.
The simultaneous development of "endogenesis and extension" will help the company's self-produced gold business to expand rapidly. It is expected that with the expansion of the Liaoshang Gold Mine and the construction and commissioning of the gold concentrate project of the construction project of mining and dressing, the company's self-produced gold output is expected to double in 2021 and 2022. In addition, Jiang Copper's ownership brings the expectation of gold asset injection, and the liquidity replenishment brought by the fixed increase is expected to significantly improve the utilization rate of gold business capacity in the future. The net profit of the company from 2020 to 2022 is 367 million yuan, 485 million yuan and 605 million yuan, and the corresponding EPS is 0.4,0.53,0.66 yuan respectively. The PE corresponding to the closing price of 14.76 yuan per share on October 22 is 37x, 28x and 22x. Maintain the "prudent overweight" rating.
Risk tips: gold and silver prices fall; copper prices fluctuate; comprehensive recovery and utilization of rare and precious metal resources is lower than expected