The net profit of home ownership increased by 132% compared with the same period last year, and the performance exceeded expectations.
In the first half of 2021, in a good market environment, the unfavorable factors of rising iron ore prices were fully transmitted, the company's volume and prices rose, and its performance increased significantly. In the first half of the year, the company produced 6.129 million tons of steel, an increase of 6.9% over the same period last year; operating income reached 31.08 billion yuan, up 35.7% over the same period last year; and net profit belonging to shareholders of listed companies was 2.73 billion yuan, up 132.2% from the same period last year. Among them, the net profit attributed to shareholders of listed companies reached 1.81 billion yuan in the second quarter, up 95.3% from the previous quarter. The performance exceeded expectations.
Regional advantages are highlighted, and steel gross profit margin is improved in an all-round way.
The company's products are mainly long wood, and the sales price of the product has been higher than that of the surrounding cities for a long time. From January to July of 2021, the average prices of rebar and medium plate in Fuzhou were 4992 yuan / ton and 5503 yuan / ton respectively, which were higher than 81 yuan / ton and 220 yuan / ton in Shanghai respectively. Under the good market environment, the company's regional advantages are highlighted, and the gross profit margin is improved in an all-round way. In the first half of 2021, the gross profit margin of the company's rebar products was 16.0%, up 2.4% from the same period last year; and the gross profit margin of plate was 23.4%, up 5.0% from the same period last year.
Profit redistribution of industrial chain under the background of flat control of crude steel output
With the orderly development of steel production capacity "looking back" work in various regions, the management and control policy for crude steel output is becoming increasingly clear. The output of crude steel is controlled, which is good for the relationship between supply and demand at the steel end, empty at the stone end of iron ore, and conducive to the redistribution of the profits of the industrial chain. With the fall in iron ore prices, steel mills are expected to maintain profits at an ideal level.
Risk hint
The demand side showed a more-than-expected decline. The flat control policy of crude steel production is not as strong as expected.
Investment advice: maintain the "overweight" rating
As a regional leader, our products enjoy market premium, steady dividend, and future production capacity has room for growth. Taking into account the impact of crude steel production control policy on the market, we raised our performance forecast. It is estimated that the company's income from 2021 to 2023 will be 62.4 billion yuan, a year-on-year growth rate of 23.1%, 46.2%, and 80.7%, respectively. The year-on-year growth rate of the company's net profit will be 80.7%, 6.3%, 5.1% and 2.1 yuan, respectively. The current share price corresponds to PE 4.8, 4.5 and 4.3x, maintaining the "overweight" rating.