Panzhihua Iron and Vanadium Titanium (000629): Increase in vanadium price promotes company performance and maintains company “recommended” rating

Panzhihua Iron and Vanadium Titanium (000629): Increase in vanadium price promotes company performance 重庆桑拿 and maintains company “recommended” rating

1.

Incident Pangang Vanadium Titanium announced its 2018 annual report.

Reported operating income of top companies 151.

60,000 yuan, an annual increase of 60.

7%; net profit attributable to shareholders of the listed company is 30.

90,000 yuan, an increase of 258 in ten years.

0%, corresponding to the previous EPS of 0.

36 yuan.

The company’s fourth-quarter operating income was 45.

0 million yuan, an increase of 15 in ten years.

6%; net profit attributable to mother 10.

4 trillion, a growth rate of about 440% in ten years.

2.

Our analysis and judgment (1) The increase in vanadium price has helped the company’s performance to improve significantly. According to wind data, the average price of vanadium pentoxide (98% tablets, Sichuan) in 2018 was about 南京桑拿网 2.

70,000 yuan / ton, a 131% increase from the price in 2017; the company’s equivalent sales of vanadium pentoxide was about 2 in 2018.

3 For the first time, it grows about 20 per year.

2%; vanadium product gross margin 37.

2%, an increase of 14 per year.

4%.

The dual advantages of price and sales volume helped the company achieve its profitability expectations.

In addition, the company reported that higher selling expenses increased by approximately 34 due to rising sales of vanadium and titanium products.

6%; total R & D expenditure is 5.

400 million, accounting for about 3.

6%; reduced financial costs by approximately 29 due to reduced bill discounting.

7%.

The Yanjia Titanium Project is under construction for impairment.

10,000 yuan, resulting in the company’s assets impairment losses in 20182.

US $ 18 trillion (II) The company’s vanadium business still has potential for future development. The company plans to produce vanadium products (equivalent to vanadium pentoxide) in 20192.

1 cobalt, titanium slag 17.

5 for the first time; chlorinated titanium dioxide 2.

0 initial; sulfate titanium dioxide 22.

0 Preliminary revenue 144.

700 million.

The import ban on vanadium slag in 2018 has led to the supply of vanadium products; the downstream demand for vanadium products has reduced the profit of the steel industry, but rebar maintenance activities may increase demand for vanadium products.

During the implementation of the new national standard for rebar, steel plants in some regions were detected to replace the addition of vanadium products through other production processes.

If the sampling inspection is strengthened, it will directly lead to such companies to modify the process of adding vanadium products, so demand for vanadium products is expected to improve.

In addition, the steel industry downstream of vanadium products is in the peak construction season, and the floor space of newly started housing in the first two months of 2019 increased by 3 compared with the same period last year.

At 1%, demand is released, and destocking of steel products is gradually carried out, so the price of vanadium products will gradually stabilize and maintain a high level. This situation is conducive to the company’s vanadium product business development.In addition, the group’s subsidiary Xichang Steel Vanadium plans to inject its vanadium product processing business into the listed company at a suitable time in the future. If the injection is successful, the company’s control of vanadium product capacity is expected to exceed 4, thereby further strengthening the vanadium product business.

3.

Investment suggestion The company is the leader of the domestic vanadium products industry. If Xichang Steel vanadium is successfully injected and the company’s vanadium product capacity exceeds 4,

The rise in vanadium prices in 2018 led the company to achieve profitability, and the ban on the entry of vanadium slag and the implementation of the new national standard for rebar may promote increased demand for vanadium products.

Taking into account that the relaxation of environmental protection and production restrictions this year may lead to the release of steel supplies, the prices of vanadium products may stabilize and maintain a high level of operation.

Therefore, we expect the company’s EPS for 2019-2020 to be 0.

42 yuan, 0.

40 yuan, corresponding to PE is 8.

76X, 9.

01X, and give “recommended” rating.

4.

Risk prompts 1) The prices of vanadium and titanium have fallen; 2) The output of vanadium and titanium has fallen short of expectations; 3) The downstream demand has fallen short of expectations; 4) Changes in industry policies.