Jinshi Resources (603505) In-depth Report: Fluorite’s Boom Upward, High Growth and Homeopathy

Jinshi Resources (603505) In-depth Report: Fluorite’s Boom Upward, High Growth and Homeopathy
The company is the absolute leader in the chronic fluorite industry.The company is a professional mining company, focusing on the investment, mining, beneficiation processing and production and sales of fluorite products, which are national strategic mineral resources.The company already has nearly 2,700 tons of fluorite ore reserves, corresponding to 1,300 tons of minerals, and a mining scale of 102 tons / year, accounting for 21 of the total available resources of a single type of fluorite mine in the country.67% is Washington’s largest fluorite resource mining company.The company is currently producing 7 mines and 5 beneficiation plants. The output of fluorite in H1 2019 will reach 14.43 Every year, the annual increase is 31%, and the output is the first in the country.  As Lanxi Jinchang is put into production, the technical transformation of Xiangzhen Mining and Zhuangcun Mining of Ningguo City is completed, and the company’s grain will continue to grow in the future.The release of the company’s production capacity and the recovery of fluorite prices have driven the company’s rapid growth in the past three years. Supply-side reform of the fluorite industry led by the policy, and fluorite production contracted.Fluorite is a “world-class scarce resource similar to rare earths”, and the National Mineral Resources Plan (2016-2020) includes fluorite in its strategic mineral catalog.But basically the fluorite industry is dominated by small mines and private enterprises. The phenomenon of “small scattered” is serious, environmental protection, production safety, and waste of resources are serious.With the emphasis on environmental protection and safe production in China in recent years, local governments have tightened fluorite mines, small mines that fail to meet environmental protection and safety standards have been shut down, and industry supply has shrunk.In 2015, nearly 14% of the total has been converted from a net exporter of fluorite to a net importer.The Ministry of Industry and Information Technology drafted the “Specification Conditions for Fluorite Industry (Consultation Draft)” in January 2019, highlighting the guarantee of the scale of fluorite mining, increasing the efficiency of fluorite mining, and reducing the efficiency of fluorite mining, which will intensify the integration of the fluorite 合肥夜网 industry.The supply of the stone industry is expected to contract further in the future. The downstream demand for fluorite has fully blossomed, and the margin of the supply and demand structure has improved, and the center of fluorite price can be expected to rise.The downstream of fluorite is mainly in the fields of fluoride fluoride, steel, electrolytic aluminum, and building materials.Benefiting from refrigerant replacement and downstream air-conditioning, the future growth rate of automobile production is expected to pick up, and hydrofluoric acid consumption is expected to increase. It is estimated that by 2020, there will be 44 domestic cases of hydrofluoric acid to increase production capacity, indirectly driving demand for fluorite.In addition, the output of steel, electrolytic aluminum, and building materials will 武汉夜网论坛 increase significantly in 2020, which will lead to increased demand for fluorite.  The supply contract of the fluorite industry is clear, the demand is expanding, the industry’s supply and demand margins are forming a tight balance, and the price of fluorite is advancing. The company continued to acquire fluorite mines and merged with industry integrators.The company acquired Xiangzheng Mining at the end of 2018, and entered Xiangmeng with Xiangzheng Mining as a fulcrum, and established Inner Mongolia Jinshi Industry, set foot in Inner Mongolia’s fluorite resources, opened the door for the acquisition, merger and merger of northern fluorite resources, and increased its own resource reserves.Broadening the company’s future development potential will radiate its influence from East China to the whole country and consolidate the company’s industry leader ranking.At the end of 2019, the company continued to merge and acquire Zhuangcun Mining of Ningguo City, and became the industry integration participant and the biggest beneficiary under the tide of industry integration required by the policy. Investment advice: The release of the company’s output overlaps with the rise in the price of fluorite, which will fully release the company’s performance.We estimate that the company’s net profit attributable to shareholders of listed companies for 2019-2021 will be 2 respectively.80, 3.97, 4.7 billion, with EPS of 1.17.1.65, 1.96 yuan, corresponding to 17x, 12x, 10x for 2019-2021.The company’s overall estimate is much higher than that of non-similar non-metallic materials industry manufacturers. As a transitional player in the integration of the fluorite industry, the company has continuous and expected acquisition of fluorite mineral resources, which is conducive to the company’s scale.We are optimistic about the continued growth of the company’s performance and the advantages of expanding market share and industry leaders in the integration of the fluorite industry, covering it for the first time, and giving it a “recommended” rating.