In 2021, the company realized operating income of 36.5 billion yuan, + 58% of the same period last year, and nearly profit of 6.1 billion yuan, + 299% of the same period last year. In the first quarter of 2022, the company realized operating income of 9.6 billion yuan, + 42% compared with the same period last year, and realized net profit of 1.3 billion yuan, + 95% compared with the same period last year. In the context of the current high global energy prices, the company's metallurgical, chlor-alkali and other products rely on the advantage of integration, profit elasticity can be expected. It is predicted that the EPS of the company from 2022 to 2024 is 4.56 pound 4.11 4.13 yuan respectively. Maintain the target price of $39 and the "buy" rating.
In 2021, the volume and price of the main products rose, and the performance increased significantly. In 2021, benefiting from the rising prices of main products such as ferrosilicon, PVC and coal, the company realized operating income of 36.473 billion yuan, year-on-year + 57.6%, net profit of 6.091 billion yuan, year-on-year + 298.6%, gross profit of 35.7%, year-on-year + 4.0pcts, and net profit of 22.5%, year-on-year + 13.8pcts. The fourth quarter realized operating income of 12.241 billion yuan, year-on-year + 65.7%, month-on-month + 26.5%; net profit of 2.379 billion yuan, + 314.5%, + 11.1%; gross profit 32.6%, year-on-year-4.8pcts; net profit 26.1%, year-on-year + 15.7pcts.
The performance in the first quarter maintained a high increase compared with the same period last year, and product prices fell somewhat from the high level. In the first quarter of 2022, the prices of ferrosilicon, PVC and other products fell from their highs in the fourth quarter of 2021, but they are still at a relatively high level in history. In the first quarter, the company realized operating income of 9.564 billion yuan, year-on-year + 41.5%, month-on-month ratio-21.9%; net profit of 1.343 billion yuan, + 94.5% year-on-year, month-on-month ratio of-43.6%; gross profit margin of 26.6%, year-on-year-6.6pcts, month-on-month ratio-6.0pcts; net profit rate of 19.2%, year-on-year + 5.6pcts, month-on-6.9pcts. We are optimistic that product prices will return to the rising channel this year as domestic stable growth policies superimpose exports that exceed expectations.
It is optimistic that the price of ferrosilicon is high during the year, and the company's profit flexibility can be expected. Affected by geopolitical factors and high overseas energy prices, the surge in overseas ferrosilicon prices catalyzes the transfer of some overseas orders to China. Domestic ferrosilicon exports were 194000 tons in the first quarter, an increase of 102.5% over the same period last year, and are optimistic that ferrosilicon exports will rise in volume and prices during the year. At the same time, driven by the policy of stabilizing growth, we are optimistic that the recovery of domestic infrastructure will boost the domestic demand of ferrosilicon. Supply side under the "double carbon" goal constraints, ferrosilicon as a high-energy-consuming products is expected to be limited for a long time, production share is expected to be concentrated to the head of high-quality enterprises, optimistic about the price of ferrosilicon products this year. With the cost advantage brought by energy integration, the company is expected to maintain strong profitability and profit flexibility under the expectation of high ferrosilicon prices.
PVC costs are strongly supported, and the company's energy integration advantage is highlighted. The global PVC production capacity is dominated by the ethylene process. Under the high crude oil price, the rise in ethylene price is expected to push up the global PVC cost curve. While the domestic production capacity is mainly calcium carbide, raw material calcium carbide as a high energy-consuming products, the new production capacity is strictly limited, and the backward production capacity is gradually cleared, which also forms a strong support for PVC prices. In the expectation of cost-driven price rise, the company is expected to resist the risk of cost fluctuations, maintain cost advantage, and be profitable at high prices by virtue of its integrated advantages such as self-produced calcium carbide, self-provided electricity, self-owned coal mines and non-producing orchid charcoal.
Risk factors: the company's product prices fell more than expected; raw material prices rose higher than expected; coal mine production safety risk; the company's new production capacity construction progress is not as expected.
Investment suggestion: the company is the domestic electrometallurgical and chemical integration leader, with a complete "coal-electricity-ferrosilicon alloy / chlor-alkali chemical" production line to realize the integration mode of high proportion self-supply of coal, complete self-supply of electric power and partial self-sufficiency of raw materials. In the context of the current high global energy prices, the company's metallurgical, chlor-alkali and other products rely on the advantage of integration, profit flexibility can be expected. Considering that the price performance of ferrosilicon and PVC is expected to exceed expectations, the company's return net profit forecast for 2022-2023 is raised to 655.9 billion yuan (the original forecast is 555.8 billion yuan respectively), and the new 2024 return net profit is forecast to be 5.9 billion yuan, corresponding to the EPS forecast for 2022-2024 is 4.56 million 4.11 pound 4.13 yuan. With reference to the average valuation of comparable companies in the ferrosilicon and chlor-alkali industries (2022 9xPE), maintain the target price of 39 yuan (corresponding to 2022 9xPE) and maintain the "buy" rating.
