Event
The company released its 2021 semi-annual report on the evening of August 17, with operating income of 31.08 billion yuan in the first half of the year, an increase of 35.72% over the same period last year, and net profit of 2.73 billion yuan, an increase of 132.21% over the same period last year, and EPS1.123 yuan, an increase of 134.45% over the same period last year.
Comment
Benefit from the rise in steel volume and prices, a substantial increase in performance. In the first half of the year, the company produced 6.1294 million tons of steel, 5.167 million tons of pig iron, 5.6132 million tons of steel, 206700 tons of coke, 6.5757 million tons of sinter and 100.91 million tons of pellets. Steel output increased slightly by 3% compared with the same period last year. Steel prices were boosted by the recovery of industrial demand in the first half of the year, and the company's profits increased significantly. The revenue of the main products rebar increased by 27.66% year-on-year, the gross profit margin increased by 2.35%, the plate revenue increased by 84.86%, and the gross profit margin increased by 4.98%.
Focus on cost control and improve performance flexibility. The company's cost has decreased significantly, with the company's operating cost as a percentage of revenue reported in the middle of 21 years down 3.8% from the same period last year. Through the acquisition and integration of high-quality iron and steel production capacity in the province, the company can enhance synergy and reduce costs; choose the opportunity to purchase imported coal coke and scrap with high performance-to-price ratio, and strive to reduce the procurement cost of raw fuel; by strengthening equipment maintenance and maintenance management, greatly reduce the cost of equipment maintenance. In 2020, each branch will reduce cost and increase efficiency by a total of 210 million yuan.
Integrate the advantageous resources in the province, and the regional leader is gradually taking shape. Before 2019, the company successively acquired 100% stake in San'an Iron and Steel through fixed increase acquisition and set up three wholly-owned subsidiaries such as Zhangzhou Minguang.
In 2020, the company will use its own funds to acquire 100% stake in Luoyuan Minguang held by Sangang Group. This acquisition will broaden its sales network, integrate regional customer resources, greatly exert synergy and enhance the company's long-term profitability. After the acquisition, the total production capacity of the company has increased to about 13 million tons, reducing transportation costs, increasing the province's market share to about 70%, and the regional leading position has been gradually formed.
Profit Forecast & Investment suggestion
It is estimated that the return net profit of the company from 2021 to 2023 is 3.834 billion yuan, 3.976 billion yuan and 4.102 billion yuan respectively, the EPS is 1.56,1.62,1.67 yuan respectively, and the corresponding PE is 5.62,5.42,5.25 times respectively. Maintain the "overweight" rating.
Risk hint
The strong cycle market operation risk of the iron and steel industry; the risk of substantial fluctuation of raw materials and energy prices; and the greater environmental protection risk of energy transformation in the iron and steel industry.