21H1 deducted non-net profit increased by 57% compared with the same period last year, maintaining the "overweight" rating. On August 20, the company released a semi-annual report, 21H1 revenue of 3.15 billion yuan (yoy+50%), net profit of 195 million yuan (yoy-45%), net profit of 188 million yuan (yoy+57%); 21Q2 revenue of 1.93 billion yuan (yoy+40%, qoq+59%), net profit of 117 million yuan (yoy-63%, qoq+50%), and net profit of 114 million yuan (yoy+40%, qoq+56%). Taking into account the company's additional 600000 tons of welded pipe production capacity planning and the company's product structure upgrading, we estimate that the company's EPS for 21-23 years is 0.87max 1.03 pounds 1.16 yuan (the previous value is 0.62 pounds 0.66 pounds-yuan), and the comparable company PE (2021E) is 7.22X. Considering the company's continued promotion of high-end products, it gives the company 7.5x PE (2021E) with a target price of 6.53 yuan (the previous value is 8.35 yuan), maintaining the "holding increase" rating.
21H1 pipeline sales increased 25% year-on-year, capacity expansion orderly promoted 21H1, the company pipeline sales of 512600 tons (yoy+25%), the average price of 5239 yuan / ton (yoy+13%), gross profit margin 13.10% (yoy-4pct), year-on-year decline is mainly due to the adjustment of freight charges to the cost, after deducting costs for the same period last year, the gross profit margin decreased by 1.1pct compared with the same period last year. From the product point of view, the gross profit margin of straight seam submerged arc welded pipe is better, with an increase of 0.32pct compared with the same period last year. In terms of the project under construction, the progress of the 30,000 ton stainless steel pipe project has reached 80% (as of the end of 21H1). In addition, according to the company announcement (2020-035), the company plans to build 600000 tons of high-quality welded pipe and factory prefabricated deep-processed pipe fittings project, which is expected to take 3 years. The company's capacity structure continues to upgrade, or can continuously enhance the company's competitiveness.
21H1, the company deducts the non-net interest rate of 6.0% (yoy+0.3pct).
It is optimistic that the marginal improvement of 21H2 infrastructure investment will bring the company's downstream prosperity restoration company products are welded steel pipes, and the downstream is mainly oil and gas transportation and urban water transportation, that is, mainly corresponding to the infrastructure industry. According to Huatai fixed Collection team "Infrastructure Investment improvement but not overestimation" (2021.8.20), based on countercyclical demands, broad fiscal space and project reserves, the view of infrastructure investment in the second half of the year is marginal improvement but not overestimated; in addition, based on policy promotion, the prosperity of the old urban reform, especially in the water supply pipeline industry is relatively high, and the company has obvious competitive advantages in the industry, so it may be good for the company.
On the one hand, the company will promote capacity expansion in an orderly manner, including 30,000 tons of stainless steel pipe and 600000 tons of welded pipe projects, or continuously improve the company's competitiveness and profitability; in addition, we are optimistic about the marginal improvement of 21H2 infrastructure investment and enhance the downstream prosperity of the company, the company may benefit. Taking into account the company's production capacity planning of 600000 tons of welded pipe and the upgrading of the company's product structure, we estimate that the company's EPS for 21-23 years will be 0.87 plus 1.03 yuan, giving the company 7.5x PE (2021E), with a target price of 6.53 yuan, maintaining the "overweight" rating.
Risk Tip: the progress of the new project is not as expected and the downstream demand is not as expected.