Guide to this report:
The company's performance for the first three quarters of '22 fell short of expectations. The company's new base is gradually completed and put into operation, which will contribute to increasing the company's performance. Furthermore, the company is expected to benefit from the explosion in demand for vanadium products brought about by the industrialization of vanadium batteries.
Investment points:
Maintain the “increase in holdings” rating. The company achieved revenue of 110 billion yuan in the first three quarters of the 22nd, a year-on-year decrease of 9.62%; net profit of 1.163 billion yuan, a year-on-year decrease of 50.92%, and performance was lower than expected. Considering the pressure on both sides of the company's steel business revenue and costs, the EPS forecast for 22-24 was lowered to 0.13/0.16/0.18 yuan (originally 0.24/0.260/0.29 yuan), and the corresponding net profit was 13.51/16.78/1,952 billion yuan. Consider maintaining a high level of prosperity for the company's vanadium products, maintain the company's target price of 3.02 yuan, and maintain the “increase in holdings” rating.
Continuing to reduce costs and increase efficiency, the cost rate continued to drop during the period. At the end of the 1-3 quarter of '22, the company's period expense rates were 8.57%, 7.88%, and 7.47%, respectively. Among them, sales, management, and financial expenses rates all continued to decline.
The company insists on increasing its profitability by reducing costs and increasing efficiency.
Make every effort to promote the construction of the new base, and the steel and coking production capacity at the new base will gradually be released. In October '21, the company announced that in order to fully complete the relocation of the old district of Handan and the construction of a new base, it would establish joint ventures with Hebei Nengjia and Energy Chemical Company, respectively. The company holds 51% of the shares. Up to now, the first phase of the coke oven of the coking project company has been coked out of coal, with a design coke production capacity of 1.05 million tons/year; the second phase coke oven is expected to meet the coking conditions for coal loading in February 23. As projects under construction at the new base are gradually put into operation, it will contribute increased performance to the company.
The company is expected to benefit from the high boom in vanadium products. The company has a vanadium product production capacity of 22,000 tons/year, and has successfully developed high-end products such as 99.9% energy-grade vanadium oxide, vanadium battery electrolyte, and metal vanadium; the company's vanadium product production technology is world-leading and the cost is low, and the future is expected to benefit from the explosion in demand for vanadium products brought about by the industrialization of vanadium batteries.
Risk warning: The commissioning of the new base has been delayed, and downstream demand has dropped sharply.
