Event
Quarterly report for 2021: revenue of 680 million yuan, an increase of 45% over the same period last year, and a net profit of 22 million yuan, reversing losses over the same period last year.
Brief comment
All the assets of the salt industry were merged into the listed companies, with a substantial increase in revenue and a turnround from losses to profits over the same period last year. In January 2019, the company acquired controlling shares in nine salt-related enterprises held by Shandong Salt Industry Group with 1.33 billion yuan in cash. Shandong Salt Industry subordinate salt industry assets have all been merged into listed companies, achieving the goal of salt industry asset securitization. 21Q1 got rid of the impact of the epidemic, and as all companies in the salt industry were included in the scope of consolidated statements, revenue increased significantly compared with the same period last year, and turned losses into profits.
After the salt reform, the trans-regional wholesale restrictions were broken, and Lu Salt was in a prominent competitive position. The State Council issued the "Salt Industry system Reform Plan" on April 22, 2016, stipulating that production enterprises can directly enter the circulation channels. Provincial wholesale enterprises can carry out cross-provincial operation, while liberalizing salt ex-factory, wholesale and retail prices. It is determined independently by the enterprise according to the production and operation cost, salt quality, market supply and demand and other factors. After the salt reform, the management strategy of salt enterprises is more flexible, but the market competition will also be intensified. In recent years, the salt reform in Shandong Province has been carried out smoothly, while Luyan Group has a high share in Shandong City, and the scale effect, brand effect and marketing channels are dominant, which fully benefits under the background of salt reform, and the overall profitability is expected to improve steadily.
"Industrial upgrading + capital operation" two-wheel drive, focusing on the main industry to enhance the core competitiveness in recent years, the company has gradually consolidated the dual-main business pattern of salt industry + steel powder and products. In the salt industry, we should improve the salt marketing system in the province, optimize the market layout outside the province, increase the national salt market share, deeply tap the market demand, strengthen the publicity and promotion of Lujing brand, and create a salt product system with distinctive features, outstanding characteristics and price differences. In terms of iron and steel powder, we should strengthen the close connection of production, research and marketing, strengthen the key technologies of special powder, and improve the level of technical equipment and product quality. The core competitiveness of enterprises has been continuously enhanced.
Layout of salt caverns for energy storage to open up new growth points
In December 2020, Shandong Luyin Salt Cave Energy Storage Engineering Technology Co., Ltd. was established to make full use of the existing salt cave underground space to carry out salt cave energy storage research. The follow-up may be through the construction of rock salt cavern oil and gas storage, the use of salt caves to store natural gas in the off-season, to improve the efficiency of resource utilization, and to provide new performance growth points for the company.
It is estimated that the return net profit of the company in 2021, 2022 and 2023 is 1.02,1.53 and 175 million yuan respectively, and the corresponding PE is 29.4,19.7,17.2 times respectively.
Coverage for the first time, giving a "overweight" rating.
Risk hint
The main business improvement is not as good as expected.