Main points of investment:
The leading nickel trader successfully transformed into trade-producing enterprises, and maintained high growth in revenue and profits.
Starting with nickel trading services, the company has gradually grown into a leading trading leader in nickel products. In 2021, the trading volume of nickel mines accounted for 26.8% of the Chinese market, ranking first in China. In 2017, the company entered nickel smelting, the company's projects ushered in the harvest period in 2021, revenue and net profit maintained high growth, and the company's net profit reached 1.735 billion yuan in 2022. ROE is at the middle and high level of the same category of Hong Kong stock listed companies.
Create Indonesia's first HPAL project, tree wet smelting benchmarking, profitability is guaranteed. Wet process is one of the main ways of efficient utilization of nickel laterite ore. Two production lines of the first phase of the company's HPAL project both reached production within 2 months after they were put into production in 2021, creating a record of the shortest construction time for new capacity in the industry, the lowest investment cost per ton of nickel and the shortest time to reach production, and opened a new era of HPAL. At the same time, the company has the advantages of industry-leading technology and stable raw materials, and continues to optimize the machinery and equipment to further improve the recovery rate, extend the running time, the operating cost industry cost curve is in a low position, HPAL profitability is guaranteed.
Capacity is released quickly, passing through the price cycle. Fire wet two-line layout, HPAL production line planning capacity of 120000 tons, is expected to be completed by the end of 2023 all production lines; RKEF nickel iron production line planning 20, capacity of 280000 metal tons, and will be completed in 2024. Rapid release of production capacity to grasp the high growth market of new energy, through the downward cycle of nickel price with volume premium, it is estimated that from 2023 to 2025, the sales volume of wet intermediate products will reach 6x12 / 120000 nickel tons respectively, corresponding to 3.3pm 6.9 / 69000 nickel tons; the sales volume of Ferro nickel 1.5pm 11.5 / 200000 nickel tons, corresponding to 1.5kg 7.5 / 122000 nickel tons.
Profit forecast and investment advice: we expect the company's homing net profit from 2023 to 2025 to be 20.5 picks 21.9 / 2.28 billion yuan, corresponding to the corresponding former equity EPS of 1.32 yuan 1.41 pounds per share, corresponding to the closing price of HK $11.76 per share on July 24, PE is 8.2 picks 7.6 times 7.4 times, the valuation level is significantly lower than that of companies in the same industry. Taking Huayou Cobalt Industry, Greenmei and Shengtun Mining, which have wet process projects in Indonesia, as reference, the average PE of the same industry in 2023 is 12.7 times. Taking into account market differences, we give the company 2023 10xPE, corresponding to a target price of 13.2 yuan per share (HK $14.39 per share), covering for the first time and giving a "buy" rating.
Risk tips: the risk of changes in the import policies of nickel products in various countries; the risk of increasing excess supply and demand; and the risk of safety and environmental protection