Tin Industry Co., Ltd. (000960): Achieving Steady Growth in Performance; Tin Business Profits Being Gradually Improved

Tin Industry Co., Ltd. (000960): Achieving Steady Growth in Performance; Tin Business Profits Being Gradually Improved
Investment Highlights The company released the 2019 first quarter report: 2019Q1, the company achieved revenue of 89.570,000 yuan, ten-year average of 0.85%, an increase of 8 from the previous month.18%; net profit attributable to mothers1.94 ppm, a ten-year increase of 9.67%, an increase of 26.64%; realized non-net profit attributable to mothers1.93 ppm, an increase of 7 per year.81%, an increase of 257.4%, the performance is in line with market expectations. In the first quarter of 2019, the improvement of the company’s gross profit margin may lie in the rise in tin prices and the contribution of zinc smelting performance, and the company’s tin performance contribution proportion is gradually increasing.The company’s overall gross profit margin in Q1 2019 reached 9.85%, compared with 11 in 2018Q4.08% fluctuated slightly from 9 in 2018Q1.22% rose slightly.① The core factor for the improvement of Q1 gross profit margin lies in the rise in tin prices and the increase in smelting and processing fees to hedge against the rise in zinc ingot prices: in Q1 2019, the tin and zinc prices increased by 0 sequentially.93% and formaldehyde 1.18%, reaching 14.74 million / ton and 2.20,000 yuan / ton, more than 1.32% and up to 15%; but benefiting from the wholly-owned subsidiary Yunxi Wenshanshan Zinc’s annual output of 10 zinc, a 60-ton conversion production line was completed in the fourth quarter of 2018 for trial production.97 times to 208.At 8 USD / ton, the increase in profits brought by zinc smelting and processing has made up for the impact of the decline in zinc prices to some extent. It is expected that the profits of zinc smelting and processing will help increase the company’s performance in the future.② What needs experts is that the proportion of the performance profit of the tin business is gradually increasing: by the end of December 2018, the company proposed to establish CCB Finance to implement cash increase in the capital conversion of its subsidiary Hualian Zinc, and the company’s controlling ratio also increased from 75.74% → 68.55%, in the first quarter of 2019, Hualian Zinc and Tin’s contribution to the company’s overall performance improved, and the increase in zinc prices led to Hualian Zinc and Tin’s profits decreased, which replaced 27 from minority shareholders’ equity.4% to 0.23 trillion can also reflect a reduction in the contribution of zinc concentrate business to the company’s performance.But scale, 2019Q1, the parent company’s net profit has increased by more than 496% to 1.US $ 2.3 billion, and the main source of profit of the parent company is the tin business. Since then, it may reflect that in the first quarter of 2019, the company’s share of profits contributed by the tin business has gradually increased.③ In addition, the three expenses and R & D expenses increased by an additional 10.65% to 5.The RMB 09 million was mainly due to the small increase in management and R & D expenses, of which R & D expenses increased by 161.5% to 0.27 trillion, sales and financial expenses are basically flat every year.At the same time, Q1 was affected by fluctuations in the forward exchange rate hedging instrument, resulting in a 444 change in fair value gains.61% to -0.32 ppm, molecular weight 191.13%, this subject 杭州夜网 is one of the important reasons dragging down Q1 performance. Earnings forecast and rating: Under the background of the logic of the exhaustion of resources in Myanmar, bullish on the rise in tin prices in 2019 and maintaining profitability in 2019-2021, it is expected to achieve net profit attributable to mothers respectively11.300 million, 14.300 million, 15.1 ppm, EPS is 0.68 yuan, 0.86 yuan, 0.91 yuan, calculated at the price on April 26, PE is 17 respectively.2X, 13.6X, 12.8 times.Maintain the level of “prudent overweight”. Risk Tips: The risk of large fluctuations in tin and zinc prices; financial risks; other risk factors