Sanxiang New Materials (603663) company dynamic comment: the epidemic drags down the annual results and the operating conditions in the fourth quarter have improved significantly

The epidemic has dragged down the annual performance.
The operating conditions in the fourth quarter have improved significantly: The company recently released its 2020 annual report.
In 2020, it realized operating income of 733 million yuan, a year-on-year decrease of 3.
68%; net profit attributable to the parent company was 65 million yuan, a year-on-year decrease of 21.
61%; The parent's net profit was 60 million yuan, a year-on-year decrease of 24.
97%; the profit distribution plan was to distribute cash of 1 yuan for every 10 shares (the dividend ratio was 29.
68%).
The company's performance decline was mainly due to 1.
The price of zirconium products fell under the impact of the epidemic.
2.
The overall decline in the output of the downstream automobile and cast pipe industries led to a decline in the sales of casting modified materials.
The annual gross profit margin fell from 31.
37% to 26.
19%.
However, from the perspective of a single quarter, the company’s operations in the fourth quarter improved significantly: in the fourth quarter of 2020, the company achieved operating income of 243 million yuan, a year-on-year increase of 32.
43%; realized a net profit of 21 million yuan, a year-on-year increase of 30.
46%; realized non-deduction The net profit attributable to the parent was 20 million yuan, a year-on-year increase of 26.
11%.
    The magnesium alloy project has received orders from CATL and it is expected to become an important growth point for the company’s profits in the future: The first phase of the magnesium alloy project in cooperation with CATL and other companies is expected to be put into operation in mid-2021, with a planned production capacity of 50,000 tons and an expected output value of 1.
5 billion yuan.
, Has obtained specific project orders from the Ningde Times.
      In the context of carbon neutrality, the new energy vehicle market is expected to grow rapidly.
Magnesium alloy projects that benefit from lightweight are expected to become an important profit growth point for the company in the future, and at the same time increase the company's valuation.
    The bottom of the traditional zirconium business is reversed.
The volume and prices are expected to rise in 2021: 2021-2022 is an important node for the company's capacity expansion: In addition to the magnesium alloy project, the first phase of zirconium oxychloride has a production capacity of 20,000 tons and the first phase of the nano-zirconia project 1,000 Production capacity per ton has been put into production in early 2021, and the special ceramic project is expected to be put into production in 2022; and the previous production capacity of 3,000 tons of industrial-grade sponge zirconium is expected to be fully increased in 2021.
In addition to the increase in production capacity, the price of zirconium products has experienced a continuous decline in 2020 and has shown signs of a bottom reversal at the end of 2020.
The company's main fused zirconium and industrial-grade sponge zirconium prices have rebounded significantly, and the company's traditional zirconium business is expected to usher in volume in 2021 Prices are rising.     Investment recommendation: We expect the company's EPS for 2021-2023 to be 0.
55 yuan/0.
93 yuan/0.
98 yuan, and the corresponding PE will be 28.
55/16.
87/16.
02 times, and maintain the “recommended” rating.