Event: the company released the three-quarter report of 2022, the company's operating income in the first three quarters of 2022 was 3.655 billion yuan, an increase of 25.10% over the same period last year, and its net profit was 422 million yuan, down 44.45% from the same period last year. Of this total, 2022Q3's operating income was 967 million yuan, down 12.88% from the same period last year and 12.36% from the previous year; the net profit from the home was-125 million yuan, down 148.04% from the same period last year and 238.24% from the previous year.
Copper and cobalt production and sales are growing steadily, high-priced cobalt historical inventory is a drag on profits, and prices are expected to stabilize in the future.
① price: copper and cobalt prices have fallen from their highs since the second quarter, and Q3 copper and cobalt prices continued to decline in 2022 compared with the same period last year. The flood in Durban Port in April this year restricted the transportation of raw materials, and high-priced raw materials arrived in China after the resumption of logistics in the third quarter. The average price of Q3 LME copper in 2022 was 7724 US dollars / ton, down 17.78% from the same period last year and 18.71% from the previous month. The price of MB standard cobalt is as low as $25.75 / lb, down 31.81% from the same period last year and 6.51% from the previous month. The current ternary market demand to maintain the boom, cobalt prices continue to decline or attract storage, cobalt prices are expected to stabilize in the future.
② volume: benefiting from the gradual commissioning of Congo Tengyuan 30,000 ton copper project, the company's copper production and sales increased compared with the same period last year; Congo Tengyuan 10,000 ton cobalt intermediate products project increased production and sales of cobalt products compared with the same period last year.
The impairment is light and optimistic that the company's profitability will improve after the price stabilizes and rises. In 2022, Q1-Q3 Company set aside the credit impairment loss of-5 million yuan and the asset impairment loss of 305 million yuan, all of which came from the inventory decline loss. The total amount of credit impairment loss and asset impairment loss of the company is 300 million yuan, and after considering the impact of income tax, the company's owner's equity will be reduced by 255 million yuan in the first three quarters of 2022.
The integration project advances steadily and strengthens the core competitiveness. According to the company announcement, by the end of the third quarter, ① Tengyuan's annual production of 20, 000 tons of cobalt and 10, 000 tons of nickel metal in the second phase of the 13500 metal salt partial leaching, extraction workshop has entered the equipment commissioning stage, the finished product workshop has entered the water trial stage, and is expected to be completed and put into production by December 2022. The 10,000-ton nickel leaching and extraction workshop is carrying out the construction and installation of auxiliary equipment, piping and electrical equipment, which is expected to be completed and put into production by December 2022. The disassembly line and crushing line of ② 15000 ton battery waste comprehensive recovery workshop have entered the stage of trial production. In terms of ③ copper, Congo Tengyuan is expected to achieve a production capacity of 40,000 tons of copper by the end of 2022 and 60,000 tons after the completion of the third phase of construction in 2023.
The company will speed up the construction of integration projects and further consolidate the core competitiveness of smelting and processing.
Investment advice: due to the obvious decline in copper and cobalt prices during the year, we adjust the copper and cobalt prices for the whole year to 8700 US dollars / ton and 30 US dollars / pound. In the future, with the gradual progress of the company integration project, we think that the company has room for development. We estimate that the operating income of the company from 2022 to 2024 will be 43.71,79.68 and 10.213 billion yuan respectively, and the net profit will be 7.34,13.97 and 1.807 billion yuan respectively. The corresponding EPS is 3.24,6.16,7.97 yuan per share, and the current stock price corresponding to PE is 20.07,10.9,8.4 times. Maintain the "buy-A" rating with a 6-month target price of 110 yuan per share.