I. Overview of events
As of December 28, 2021, the average prices of cathode copper, electrolytic nickel and MB cobalt in 2021 were 68518.04 yuan / ton, 139447.5 yuan / ton and 23.39 US dollars / lb respectively, up 40.11%, 25.44% and 51.69% respectively over the same period last year. In 2020, the average prices of cathode copper, electrolytic nickel and MB cobalt were 48903.59 yuan / ton, 111167.9 yuan / ton and 15.42 US dollars / lb, respectively.
II. Analysis and judgment
Since 2016, around the new energy industry chain, the company has gradually become a domestic high-quality mining enterprise focusing on nickel, copper and cobalt.
The layout of the company's copper, cobalt and nickel projects began in 2016. the existing layout is as follows: 1 Congo Copper and Cobalt, CCR (51% interest, copper-cobalt smelting) + CCM (100% interest, copper-cobalt smelting) + Kalong Wei (95% interest, copper-cobalt mine); 2 domestic cobalt deep processing + zinc smelting, Ke Lixin (100% equity acquired in 2018, cobalt deep processing), four-ring zinc germanium (2019 acquisition, existing 100% equity, zinc smelting) 3 by the end of June 2021, the company has a production capacity of 40,000 tons of copper, 8000 tons of cobalt, 40,000 tons of nickel and 250000 tons of zinc. With the commissioning of CCM (30,000 tons of copper, 5800 tons of cobalt) and Kalonwei (30,000 tons of copper, 3556.4 tons of cobalt) and the expansion of four-ring zinc and germanium, the company will form an annual production capacity of 120000 tons of copper, 45000 tons of nickel, 16000 tons of cobalt and 300000 tons of zinc in the next three years.
The company has entered the period of harvest and high-speed growth since 2021.
The company began to lay out the new energy industry chain since 2016. the main reason for the sharp fluctuation of the performance in 2017-2019 is the fluctuation of cobalt price. the year-on-year change of net profit of the company from 2017 to 2019 was + 4.2,1.2 and-190 million yuan respectively, and the gross profit of cobalt material business changed by + 7.1,1.5 and-560 million yuan respectively compared with the same period last year. According to the split of the results in the first half of 2021, Youshan Nickel, CCR, Sihuan Zinc Germanium and Ke Lixin contributed 260 million yuan, 289 million yuan, 99.34 million yuan and 44.69 million yuan to the company's return net profit respectively. 2021H1, Youshan Nickel and CCR accounted for 76.92% of the company's return net profit, and the company's new energy layout gradually entered the harvest period. In the future, with the commissioning of CCM and Kalong Wei projects, the company's profits will be greatly thickened.
III. Investment suggestions
The company's production capacity has increased rapidly, the superimposed metal price is high, and the company's profits may enter a period of rapid growth. We assume that the price of copper is 60,000 yuan / ton, nickel is 110,000 yuan / ton, MB cobalt price is $20 / lb, zinc is 17,000 yuan / ton, 2CCM project begins to release production in 22 years, and 3 zinc smelting capacity increases year by year. It is expected that the company will achieve a return net profit of 14.8,19.8 and 2.6 billion yuan respectively from 2021 to 2023, and EPS will be 0.54,0.72 and 0.95 yuan respectively. The PE corresponding to the closing price on December 29 was 20 times, 15 times and 11 times respectively, covering the company for the first time and giving the company a "recommended" rating.
Fourth, risk tips:
The prices of copper, cobalt, nickel and other metals have fallen sharply; the progress of the project is not as expected; and the risk of exchange rate fluctuations.
