ERDOS(600295) 光大证券·2024-10-10 05:37Investment Rating - The report initiates coverage on the company with a "Buy" rating, citing its strong coal resources, integrated industrial chain, and potential for profitability improvement under future energy consumption control policies [10] Core Views - The company's dual business segments of cashmere apparel and power metallurgy chemicals are well-established, with the power metallurgy subsidiary contributing 78% of the company's net profit in 2023 [1] - As a leading silicon iron producer, the company could benefit from potential price increases driven by energy consumption control policies, with a 1000 yuan/ton price increase potentially boosting net profit by 27% [1] - The company's coal resources and investments in Yongmei Mining provide a stable earnings base, with Yongmei Mining contributing 25% of the company's net profit in 2023 [1] - The company's cashmere apparel business, with a 57% gross margin in H1 2024, remains a stable contributor to earnings [18] Business Segments Power Metallurgy and Chemical - The company is a leading silicon iron producer with a 28% domestic market share in 2023, and its silicon iron business could see significant earnings growth if energy consumption control policies tighten [1] - The company's coal resources and investments in Yongmei Mining provide a stable earnings base, with coal contributing 16% of gross profit in 2023 [1] - The chemical segment, including PVC, caustic soda, and fertilizers, accounted for 29% of gross profit in 2023, with caustic soda showing relatively strong profitability [1] Cashmere Apparel - The company is the world's largest cashmere apparel producer, with a 57% gross margin in H1 2024, and has established a full industry chain from raw material procurement to retail [1][18] - The apparel segment contributed 29% of gross profit in 2023, with stable revenue and gross margins over the past five years [1][54] Financial Performance - The company's revenue and net profit have shown fluctuations, with 2023 revenue at 30.554 billion yuan and net profit at 2.904 billion yuan, reflecting a 38.64% year-on-year decline [3] - The company has maintained a high dividend payout ratio, with a dividend yield of 8.55% as of October 9, 2024, ranking second in the A-share steel sector [2][57] Industry and Market Outlook - Silicon iron prices are highly sensitive to energy consumption control policies, with potential price increases driven by tightening policies in key production regions such as Inner Mongolia and Ningxia [8][29] - The company's integrated industrial chain, including self-owned power plants and coal resources, provides a competitive advantage in the high-energy-consuming silicon iron and chemical industries [31][39] - The cashmere apparel industry remains stable, with the company's strong brand and distribution network supporting its market position [53][54] Valuation and Forecast - The report forecasts the company's net profit for 2024-2026 to be 2.042 billion yuan, 2.534 billion yuan, and 2.928 billion yuan, respectively, driven by potential improvements in silicon iron prices and stable contributions from coal and cashmere businesses [10][65]