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方大炭素(600516):石墨电极业务盈利能力承压 自有资金回购股份彰显公司信心

Fangda Carbon (600516): The profitability of the graphite electrode business is under pressure, and the repurchase of shares with its own capital shows the company's confidence

光大證券 ·  Aug 30, 2023 19:02

Incident: 2023H1 achieved operating income of 2,621 million yuan, -1.88% year-on-year; realized net profit of 281 million yuan, -17.56% year-on-year. 2023Q2 achieved operating income of 1,275 million yuan, -16.22% year-on-year and -5.24% month-on-month; realized net profit of 59 million yuan, -80.64% year-on-year, and -73.16% month-on-month.

The profitability of new 2023H1 carbon materials is greatly superior to traditional carbon products. The average operating rate of electric furnace steel companies monitored by 2023H1 Mysteel was 57.70%, which was at a low level in the same period of 5 years, dragging down the profitability of graphite electrodes. 2023H1 subsidiaries, Fushun Carbon and Hefei Carbon, which focus on the production of traditional carbon products, changed their net profit from profit to loss. Rongguang Carbon's net profit was -21.64% to 17 million yuan, and the net profit of Fangda Carbon Composite Materials Co., Ltd., which focuses on the production of new carbon materials, was -8.43% to 168 million yuan over the same period.

The company actively adjusted its product structure, and carbon brick production reached 17,000 tons in the first half of 2023. The company actively adjusted the product structure. The output of 2023H1 graphite carbon products was 104,000 tons, +2.97% year-on-year, of which the output of graphite electrodes was 81,000 tons, -3.57% year-on-year, and the production of carbon bricks was 17,000 tons, or +30.77%.

Dual control of energy consumption will gradually shift to dual control of carbon emissions, and the popularity of graphite electrodes is expected to recover. On July 11, the second meeting of the Central Committee on Comprehensive and Deepening Reform deliberated and approved the “Opinions on Promoting the Gradual Shift to Dual Control of Energy Consumption to Dual Control of Carbon Emissions”. According to our “Significant Beneficiaries from Controlling Energy Consumption to Controlling Carbon Emissions — Fangda Carbon Investment Value Analysis Report” published on February 20, 2022, short-process steelmaking consumes a lot of electricity and has low carbon emissions. It is an industry that is suppressed by energy consumption control and benefits from carbon emission control. Under the trend of gradually shifting from dual control of energy consumption to dual control of carbon emissions, the popularity of graphite electrodes, which is one of the important materials in short-process steelmaking, is expected to recover further.

The repurchase of shares with own funds is used for employee stock ownership plans and/or equity incentive plans, demonstrating the company's confidence. On August 28, the company announced that it intends to repurchase the company's shares through centralized bidding transactions. The repurchase amount is not less than 250 million yuan and not more than 350 million yuan (inclusive). The repurchase period is no more than 12 months from the date the board of directors deliberates and approves the share repurchase plan. The repurchase price does not exceed 9.10 yuan/share. Based on the upper limit of the repurchase price, the number of shares repurchased this time accounts for about 0.68%-0.95% of the company's total share capital.

The controlling shareholder issued 3 billion tradable bonds to enter the share conversion period, which ends in November 2024. The controlling shareholder of the company, Liaoning Fangda Group Industrial Co., Ltd. completed the issuance of tradable bonds in November 2021, with an issuance scale of 3 billion yuan, a term of 3 years, and a tradable bond exchange period from May 10, 2022 to November 5, 2024.

Profit forecast, valuation and rating: Due to the decline in the profitability of the steel industry, the decline in the operating rate of short-process steelmaking has led to a weakening in demand for graphite electrodes. We lowered the company's net profit forecast for 2023-2024 by 32.16% and 29.10% to 7.62 and 1,086 billion yuan, respectively, and added the net profit forecast for 2025 to 1,372 billion yuan. In the process of switching from dual control of energy consumption to dual control of carbon emissions, graphite electrodes are still one of the most beneficial products, and profitability is expected to be further restored, so the company's “buy” rating is maintained.

Risk warning: Downstream demand in the graphite electrode industry has weakened sharply; the prices of raw materials for needle coke and petroleum coke have risen sharply.

The translation is provided by third-party software.


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