Shenghe Resources (600392) 2019 Third Quarterly Report Review: Falling Rare Earth Prices Drag Down Performance

Shenghe Resources (600392) 2019 Third Quarterly Report Review: Falling Rare Earth Prices Drag Down Performance
Event: In the first three quarters of 2019, the company achieved revenue of 54.27 ppm, an increase of 2 per year.07%, realized net profit attributable to mother 2.570,000 yuan, an average of 23 for ten years.94%, net profit after deduction is 248 ppm, a ten-year average of 26.twenty three%.In the third quarter alone, the company achieved revenue of 15.97 ppm, with a ten-year average of 19.93%, net profit attributable to mother 0.76 ppm, with a ten-year average of 47.18%, net profit after deduction is 0.75 ‰, 48 years ago.15%.  Opinions: The growth rate of the company’s net profit in the third quarter of 2019 is mainly affected by 1) fluctuations in the price of light rare earth; 2) high stock prices of raw materials; 3) management costs.As of the third quarter of 2019, the average price of praseodymium and neodymium oxide was 31.690,000 yuan / ton, compared with the average price of 32 in the same period last year.45 million / ton formaldehyde 2.5%, product prices dragged down company profits.Subsequently, at the end of the second quarter and the beginning of the third quarter, due to the closure of the trade channel by Tengchong and the impact of trade friction between China and the United States, the new price of praseodymium oxide jumped.750,000 yuan / ton, followed by unilateral downward movement.The company may have a high stock price of raw materials, which led to a decline in the third quarter performance.Finally, in the third quarter, the company’s administrative expenses were zero.4.5 billion, compared with 0 in the same period last year.2 billion percent increased 125%.The increase in management fees further dragged down performance.  Actively arrange upstream rare earth ore to make up for the shortcomings of domestic resources: In October 2012, the company was entrusted with the management and management of Sichuan Hanxin Mining to seize domestic high-quality mines; the company acquired Mianli rare earth in 15 years to further ensure the supply of rare earth concentrate raw materials.Overseas: Greenland was acquired in September 16; May 17 was tendered for the Pass of the United States Rare Earth Mining Project. The company has the mining right of the mine and the right to use related patents (the initial period is 30 years).The company’s technical team continues to work with the Mountain Pass mining team in the United States to stabilize the mine production indicators and 南京夜网论坛 increase the output of rare earth concentrates. As of June 2019, the output of rare earth concentrates has exceeded expectations.  Earnings forecast We expect that there will be excessive supply of upstream light rare earth in the future, and the price may continue to decline. We lower the company’s profit forecast. It is expected that the company will be in 2019?2021EPS is 0.19, 024, 0.28 yuan.Based on the company’s active deployment of upstream resources, future performance growth is highly certain, and the company’s “overweight” rating is maintained.  Risk Warning: Rare earth prices have fallen and downstream demand has fallen short of expectations.