Investment logic
The three major businesses of ferroalloy, chemical industry and cashmere go hand in hand. 1) the annual production capacity of ferrosilicon is 1.6 million tons, and that of silicon-manganese alloy is 400000 tons, which has formed the first production and marketing scale of ferrosilicon at home and abroad. 2) the existing production capacity of PVC is 800000 tons, calcium carbide 1.6 million tons, caustic soda 600000 tons, chlor-alkali chemical industry fourth in China and first in Inner Mongolia. 3) the brand awareness of cashmere business is high, and the whole industry chain management model of purchasing and processing of raw cashmere, garment production, brand promotion, channel construction and product sales has been established.
The price of ferrosilicon is flexible and carbon neutralization is expected to benefit.
Investment opportunities in high energy-consuming industries have been staged on coke, the current policy environment of ferrosilicon industry is similar, the logic of capacity control and energy consumption is similar, and they are both small varieties with high elasticity. At present, the shutdown capacity of Baotou and Wulanchabu accounts for nearly 8% of the country's monthly output. Referring to the fact that the shutdown capacity of Ningxia accounts for 15% of the country in 2017, the price has risen from 6000 to 12,000 yuan / ton in March.
It is expected that the price center of ferrosilicon will move up to 7500-8000 yuan / ton in 2021. If the phase-out policy in Inner Mongolia and other places is well implemented, it is expected to continue to promote the price of ferrosilicon.
Ferrosilicon accounts for 30% of the company's production and sales, the first in the country; self-provided power plant superimposed isolated grid operating cost advantage is significant, the estimated price increase of 100 yuan corresponds to a profit of 106 million yuan, the performance flexibility.
The attention of chemical business is low and the expectation is poor. The company pays less attention to the market in the early stage of the expansion of post-natal chemical business, and the cost side also has a greater advantage, especially PVC. It is expected that the domestic PVC industry will remain in a tight balance in 2021, and the supporting price will continue to maintain a high level.
There is a marginal improvement in cashmere business after the epidemic. Combined with the performance of previous years, the company's cashmere clothing sector business is stable, after the epidemic is controlled in 2021, it is expected to return to the profit scale of about 300 million in previous years.
Investment advice & profit Forecast
It is estimated that the company's operating income from 2021 to 2023 will be 29.47 billion yuan, 29.795 billion yuan and 29.88 billion yuan respectively, an increase of 27.4%, 1.1% and 0.3% over the same period last year. The net profit of returning to the mother was 3.399 billion yuan, 3.45 billion yuan and 3.498 billion yuan respectively, an increase of 122.45%, 1.49% and 1.38% over the same period last year. The corresponding EPS was 2.38,2.42,2.45 yuan respectively, and the corresponding PE was 8.4,8.3 and 8.3 times, respectively. As a variety of price elasticity, we give the company 10 times PE, corresponding to 33 billion market capitalization in 21 years, give the target price 23 yuan, and give the "buy" rating for the first time.
Risk hint
Ferro-silicon production capacity policy is not up to expectations, resulting in sharp price fluctuations and high pledge rate of major shareholders.
