Hebei Xuanong (000923): Earnings of iron ore gradually realized

Hebei Xuanong (000923): Earnings of iron ore gradually realized

Performance summary: The company released the 2018 results flash report, reporting that the two companies achieved operating income49.

72 ppm, a decline of 7 per year.

95%; net profit attributable to the parent company1.

31 ppm, a decrease of 45 per year.

81%, equivalent to EPS0.

20 yuan, compared with 0 in the same period last year.

At the same time, the company announced the 2019 first quarter performance forecast, reporting that the two companies achieved net profit attributable to the parent company of 1 ppm-1.

10,000 yuan, an average increase of 198 in ten years.

30% -228.

13%, 成都桑拿网equivalent to 0 EPS.

15 yuan-0.

17 yuan; the first quarter’s performance has improved significantly: the 2018 performance has experienced a significant decline, which is due to the South African subsidiary of the copper phase II project and the copper phase I project is in the convergence stage, the initial gradually larger, equipment aging, production and maintenance and other factors.

However, after the company entered the first quarter of 2019, its performance began to improve significantly, and its single-quarter profit was close to the same period of last year. This was mainly due to the sharp rise in the profit of the company ‘s “mineral resources” sector due to the rise in iron ore prices.

The company’s annual sales of magnetite reach more than 600 mm, contributing most of its profits.

Iron ore prices have risen since the first quarter. The Platts 62% price index has increased by more than 20% from the beginning of the year at $ 72, and the average ore price has reached 82.

45 US dollars, an increase of 10 US dollars from the fourth quarter of last year. The surge in ore prices has made up for the improvement of the company’s performance; the domestic scarce high-quality iron ore target: The company obtained the South Africa Palabora copper mine and vermiculite mine through the acquisition of Silian Hong KongMining and copper smelting capacity.

Because Palabora copper ore is a copper-iron associated ore, magnetite will be naturally separated during the processing of copper ore. After decades of mining, the company has accumulated nearly 200 million tons of magnetite resources, containing iron.The amount is about 56%, and the iron content can be further increased to 64 after a simple pre-processing.


Therefore, the injection of copper ore not only enables the company to enter the field of copper rod and potassium production and sales, but also allows it to directly obtain the reduced stockpiled magnetite resources.

According to the annual report data, the company’s local procurement cost is only about $ 10, which is much lower than the average cost of domestic mines. Considering logistics costs, port miscellaneous charges, etc., its arrival cost is expected to be $ 40-50 / ton, althoughThe cost of site selection has risen, but the cost advantage is still obvious; the supply and demand support has substantially shifted the ore price center: iron ore prices have continued to perform well after entering the second quarter, and the strong ore prices are mainly due to the relaxation of the implementation of environmental protection measures by steel mills this year.The average daily output of pig iron from January to February reached 214.

6 Initially, in addition to the previous significant growth.

8%, and the month-on-month increase also reached 5.

24%, strong steel mill production plays an important supporting role in iron ore demand.

In this case, once the supply side changes, the price elasticity is extremely great.

Due to the decline in long-term capital expenditure of iron ore, expansion will lead to further decline in iron ore production capacity after 2019. For existing production capacity, the shrinking and shrinking of capital expenditure will lead to a reduction in the fault tolerance rate of production capacity.A series of events such as the Brazilian mine disaster this year can be said to have both contingency and inevitability.

If Vale’s 2019 production reduction and reduction of 3000-6000 is expected to resume its continuity, the increase in iron ore is expected to be replaced by -2200-800 this year under the plus and minus hedging, and the industry capacity contraction cycle will gradually come forward.Mineral prices continue to be strong; investment recommendations: 2019 is the turning point for the company ‘s mineral resources business to break through again. The output of the second phase of the transitional copper mine project will gradually increase, which will change the drag caused by the production and sales of copper products in the past year; compressionThe company’s sales of magnetite are expected to increase significantly. Under the background that the price of iron ore has continued to rise this year, the profitability of its iron ore products will usher in an explosion.

We estimate that the company will achieve net profit attributable to mothers of 1, respectively from 2018 to 2020.

310,000 yuan, 7.

58 ppm and 10.

62 ppm, a ten-year increase of -45.

54%, 477.

90% and 39.

96%, equivalent to 0 respectively.

20 yuan, 1.

16 yuan and 1.

63 yuan, maintaining the “overweight” level.

Risk reminder: The second phase of copper ore replacement is on schedule; the price and sales of magnetite are lower than expected; the risk of exchange loss.