Jinshi Resources (603505): Supply and demand in the fluorite industry have risen rapidly with a good volume and price, leading to rapid growth in performance

Jinshi Resources (603505): Supply and demand in the fluorite industry have risen rapidly with a good volume and price, leading to rapid growth in performance
Investment Highlights: Leading domestic fluorite industry, with multiple large single fluorite mines, with the largest domestic output.At present, the company has produced 7 single fluorite mines and 5 mineral processing plants (Lanxi Jinchang Mineral Processing Plant is under construction), including 6 large-scale fluorite mines with an annual mining scale of 10 inches / year and a total mining scale of 102 feet /In the year, fluorite production ranked first in the country.With the completion of the technical reform of Xiangzhen in Inner Mongolia, we expect the company’s fluorite product output to exceed 35 tons in 2019, while the company’s classified fluorite product output in 2018 is 25.45% growth rate, the rapid release of output will bring rapid growth in performance. Affected by environmental protection, ecological red line, government classified regulatory policies, etc., the domestic fluorite industry’s governance integration has 武汉夜网论坛 accelerated, and supply has continued for a long time.It is currently the world’s largest fluorite producing and exporting country, but the industry is generally chaotic, small, and scattered. The main production areas are Zhejiang, Hunan, Jiangxi, and Inner Mongolia. The company’s domestic production is the largest, but it also only accounts for 7%.Market share.By the 2011 high of 470, it dropped to about 350 inches in 2018, and exports can also replace and become a net importer for the first time in 2018.The slow recovery of production in Inner Mongolia due to the difficulty of silver-doped diffusion and the import restrictions in Myanmar. The domestic supply of fluorite has been interrupted for a long time. The improvement of green mines and governance requirements will also accelerate the integration of the industry. Driven 厦门夜网 by the transformation of refrigerants and the steady increase in the production of electrolytic aluminum and crude steel, the demand for fluorite continued to increase, the supply and demand pattern improved, and the price center promoted a continuous upward movement.Fluorite has a wide range of downstream applications. Fluoride, electrolytic aluminum, and the steel industry are expected to account for 52%, 15%, and 20% of the demand. The reduction of second-generation refrigerant replacement and the large-scale production of third-generation refrigerants have been put into operation.The demand for stone was pulled (the second-generation R22 consumes 0 per unit).5 hydrofluoric acid, while the third-generation refrigerants have an average unit consumption of hydrofluoric acid of 0.Above 8), according to our preliminary statistics, the mainstream three-generation refrigerants R134a, R125, and R32 are expected to be put into production at 4.8 and 8.2 respectively in 2020.7, 22 constant.At the same time, the production of electrolytic aluminum and crude steel is also expected to continue to grow steadily.In the short term, most companies in Inner Mongolia, Anhui, Jiangxi and other places are still shutting down for rectification. At the same time, the mining in Inner Mongolia will be gradually stopped in winter to promote the steady growth of fluorite prices. In the long term, according to our calculations, we expect fluorite to be 2019The demand growth rate in -2021 will be 3%, 4%, and 2%, respectively, and will not expand due to the downturn in a single field. Instead of supply replacement, the supply and demand layout will improve, and the fluorite price center is expected to continue to rise. Acquired Xiangzheng Mining and entered Inner Mongolia. The layout of the “Northern Base” has begun to take shape.The grade of fluorite ore in Inner Mongolia is high, but the proportion of small-scale mines is expected to be as high as 65%. The re-mining requirements after the Yinman mine are difficult, the progress is slow, and the integration specifications are imminent. The company completed the acquisition of Xiangzhen Mining in January 2018 and entered Inner Mongolia. It has completed installation and commissioning in the second quarter of 1919 and started large-scale production. The remaining recoverable reserves of Xiangzhen Mine are 512.17 Initially, the scale of the mining license is 15 per year, and the design capacity of the plant is 20 per year.In March 2019, the company established Inner Mongolia Jinshi, which officially kicked off the integration of Inner Mongolia fluorite resources.In the future, it will take 5-10 years to achieve project company exploration, mergers and acquisitions, and other methods to have 3,000 prospectable prospective resource reserves (minerals), and to compact the company’s internal fluorite faucet. Investment rating and profit forecast.For domestic fluorite leaders, the short-term supply of fluorite will be affected by the winter stoppage in Inner Mongolia. It will be affected by environmental protection for a long time, the ecological red line and supervision will be severe, and the supply will shrink significantly.The downstream demand is driven by the regeneration of refrigerant, the continuous increase in the production of electrolytic aluminum and crude steel, the supply and demand pattern is improving, and the fluorite price center continues to move upward.We estimate the company’s net profit attributable to its parent to be 2 in 2019-2021.66, 3.80, 4.3.7 billion, with EPS of 1.11, 1.58,1.82, corresponding to the current PE is 19X, 13X, 12X, for the first time coverage, giving an overweight rating. Risk Warning: 1.Fluorite prices fell; 2.Enforcement of environmental protection is not in place, and production resumed in various places exceeded expectations; 3.4. Weak demand for fluorides due to the continuous expansion of production and sales of air conditioners and automobiles; 4.Xiangzhen’s output was lower than expected under cold winter conditions.