What happened: the company released its 2021 annual report and 2022Q1 quarterly report. In 2021, the company achieved revenue of 45.237 billion yuan, an increase of 15.3% over the same period last year, a net profit of 1.031 billion yuan, an increase of 1645.6%, and a non-return net profit of 651 million yuan, an increase of 378% over the same period last year. 2022Q1's revenue was 6.226 billion yuan, down 45.8% from the same period last year, 20.8% from the previous month, and its net profit was 375 million yuan from the same period last year, down 10.0% from the same period last year, an increase of 181.1% from the previous year, deducting 452 million yuan from the previous year, an increase of 7.2% from the same period last year and 261.1% from the previous year. The performance is in line with our expectations.
The production capacity of copper, cobalt and nickel has been released, and the volume and profit of products have risen. Due to the release of production capacity of Youshan Nickel and CCR projects, the company's copper, cobalt and nickel production increased significantly. Volume: sales of zinc products were 256400 tons, up 3.12% over the same period last year; nickel products were 40100 tons, up 1358%; cobalt products were 10200 tons, up 52.4% over the same period last year; and copper products were 39400 tons, up 38.27% over the same period last year. Benefits: economic recovery and the rapid development of new energy vehicles, copper, cobalt and nickel prices have risen sharply, and the company's profitability has improved significantly. The gross profit of zinc tons is 1084 yuan, down 153 yuan from the same period last year, mainly because of the decline in zinc concentrate processing fees; the gross profit of nickel tons is 41807 yuan, an increase of 19229 yuan over the same period last year; the gross profit of cobalt tons is 112878 yuan, an increase of 66079 yuan over the same period last year; and that of copper tons is 28779 yuan, an increase of 11417 yuan. The company's gross profit margin and net profit margin were 9.71% and 5.60%, respectively, up 5.56pct and 5.05pct.
The non-recurrent profit and loss changes greatly, and the impairment loss is a drag on the 2021 performance. In 2021, the company's non-recurrent profit and loss changed greatly, of which the net income from changes in fair value was 450 million yuan, an increase of 422 million yuan, mainly due to an increase of 261 million yuan from transactional financial assets. The asset impairment loss was 363 million yuan, an increase of 266 million yuan over the same period last year, mainly due to the increase in the impairment of intangible assets, other current assets and projects under construction, and the credit impairment loss increased by 165 million yuan, mainly because other receivables increased significantly. The impairment loss affected the net profit of 308 million yuan.
22Q1 asset impairment loss decreased, performance rose month-on-month, compared with the same period last year, the increase is mainly due to the rise in volume and price.
Future highlights: 1) the industry maintains a high boom, and the product price performance is strong. Global inflation is high, supply chain problems continue, the energy crisis in Europe has led to reduced production of zinc, copper and zinc prices remain high; demand for new energy vehicles is strong, while supply growth is slow, and nickel and cobalt prices are strong. 2) implement the strategy of "upper control of resources and downward development of materials", and the integrated layout is gradually taking shape. Upstream: CCM3 10,000 tons of copper, 5800 gold tons of cobalt hydroxide project capacity climbing, Kalonway 30,000 tons of copper, 4000 tons of cobalt project to be put into production by the end of the year, Shengmai Nickel 40,000 tons nickel project is moving forward steadily.
Downstream: the output of Ke Lixin's high-end cobalt products is not less than 3000 tons, focusing on promoting the construction of 300000 tons of nickel sulfate, 300000 tons of ferric phosphate and 10,000 tons of cobalt-containing battery materials in Guizhou, and the first phase of 150000 tons of nickel sulfate will be put into production in the first half of 2023. 3) the potential of increasing resources and reserves is great, and the ability of upstream management and control is enhanced. Both Kalonwei and FTB projects are located in rich ore zones near large copper and cobalt deposits with good prospecting prospects and great potential to increase reserves in the future.
Investment advice: the price of copper, cobalt and nickel is high. With the gradual release of production capacity, the company's performance will increase significantly. We expect the company to achieve a net profit of 1.918 billion yuan, 2.456 billion yuan and 3.291 billion yuan in 2022-2024, with an EPS of 0.68,0.87 and 3.291 billion yuan respectively. The PE corresponding to the closing price on April 29 is 10, 8 and 6 times, respectively, maintaining the "recommended" rating.
Risk tips: energy prices rose sharply, capacity release was lower than expected, downstream demand was lower than expected, and so on.
