Zinc Industry Co., Ltd. (000751): Benefit from high processing fees and continued significant improvement in profits


Zinc Industry Co., Ltd. (000751): Benefit from high processing fees and continued significant improvement in profits
Event description: The company released the third quarter report of 2019 on the evening of October 23, and the company achieved revenue 57 from January to September 2019.50 ppm, a decrease of 3 per year.12%; net profit attributable to mother 1.3.5 billion, an increase of 148% in ten years.The third single quarter achieved revenue of 20.08 million yuan, an increase of ten years.38%; net profit attributable to mother 0.670,000 yuan, an increase of 544% in ten years. Event comment: Profits are gradually realized, and the performance of pure smelting targets is flexible.With the removal of zinc storage in the winter of last year, the boost to the company’s profits was gradually realized with high zinc processing fees. The net profit in the single quarter increased year-on-year.As a pure smelter, the company’s profit is low due to the impact of zinc prices, and it only affects the scale of revenue. Until then, the chain was basically flat.In other companies in the same industry mentioned above, about 60% of the company’s raw materials come from imported zinc ore, which is divided into internal processing fees. Import processing fees have a comparative advantage. The duration of high processing fees is expected to exceed expectations. At present, zinc inventory is at a historically low level. Domestic monetary policies are becoming looser, which stimulates downstream demand. Metal prices may rebound.In the case of high zinc processing costs, the smelting company’s operating rate has gradually increased. The original idle capacity reuse or high-intensity use of machinery will increase the probability of equipment failure, increase the frequency of maintenance, and affect the release of zinc ingot output at the supply side, maintaining zinc.price.Under the high pressure of environmental protection, the concentration of the industry has increased, and the bargaining power of large smelting companies has improved.From the perspective of capital budget and construction cycle, there is a time lag in the launch of new capacity. Investment rating and estimation: According to the profit forecast, it is estimated that the company’s net profit attributable to the parent in 2019-2021 will be 1.93, 2.83, 3.160,000 yuan, an increase of 263 in ten years.43%, 46.76%, 11.59%, 北京夜生活网 corresponding PE is 24, 16, 14 respectively.Maintain the “Recommended” level. Risk Warning: Overseas zinc ore release is less than expected risk; zinc smelting capacity exceeds expected risk; downstream demand is less than expected risk; weather factor company project shutdown risk