21H1's home net profit increased by 46% compared with the same period last year, maintaining the "overweight" rating.
On August 25, the company released semi-annual report, 21H1 revenue 20.8 billion yuan (yoy+42%), return to the mother net profit 1.26 billion yuan (yoy+46%); 21Q2 revenue 13 billion yuan (yoy+57%, qoq+64%), return to the mother net profit 840 million yuan (yoy+87%, qoq+103%). The company's regional leading position is stable, continue to improve product quality and ability, high-end product sales volume, we are optimistic about the development of the company. Considering the sharp rise in 21H1 steel prices under the economic recovery, we slightly raise the relevant assumptions. It is estimated that the company's EPS for 21-23 years will be 1.04 pound 1.09 yuan (the previous value is 0.98 pound 1.03 pound 1.13 yuan), and the comparable company PE (2021E Wind unanimous expectation) will be 4.93 times. Considering the company's regional advantages, we will give the company 5.5x PE (2021E) with a target price of 5.69 yuan (the previous value of 5.89 yuan), and maintain the "holding increase" rating.
The prices of steel and raw materials have risen, and the gross profit margin of iron and steel products is higher than that of the same period last year-1.7pct according to the company's semi-annual report, 21H1 produced 312,412 and 4 million tons of iron, steel and materials respectively (yoy-4%, + 6%, + 7%), sold 3.98 million tons of commodity billets (yoy+3.95%), and completed 42% of the 21-year sales plan. It is estimated that the average steel price is 4886 yuan / ton (yoy+47.2%), the gross profit per ton is 514 yuan / ton (yoy+105 yuan / ton), and the gross profit margin is 10.5% (yoy-1.7pct). During the reporting period, the company actively participated in Guangdong Province's "one nuclear zone, one zone" and "double district construction", giving full play to the regional leading advantages, realizing 20.1 billion of the operating income in Guangdong Province (yoy+45.8%), accounting for 96.6% of the total operating income (yoy+2.2pct). Revenue outside the province decreased by 10% compared with the same period last year, but the gross profit margin reached 17.19% (yoy+8.14pct).
21Q2's gross profit margin and net sales margin improved month-on-month.
21H1 has a gross sales margin of 10.3% (yoy-0.3pct) and a period expense rate of 3.0% (yoy-0.5pct). In terms of items, financial expenses are negative year-on-year due to a decrease in net interest expenses and an increase in foreign exchange earnings; net sales margin is 6.0% (yoy+0.1pct). 21Q2, gross sales margin 10.5% (yoy+0.3pct, qoq+0.6pct), period expense rate 2.6% (yoy-0.2pct, qoq+1.0pct), net sales margin 6.5% (yoy+1.0pct, qoq+1.2pct). In terms of cash flow, the net operating cash flow of 21H1 is 2.42 billion yuan (yoy+94%), mainly due to the increase in the return of cash from steel sales compared with the same period last year.
The leading position of the region is stable, and the rating of "increasing holdings" is maintained.
The company's regional leader is stable, and continues to deepen the "base management, brand operation" model, strengthen regional market maintenance and coordination, Guangdong regional market share increases steadily. At the same time, the company continues to improve product quality, high-end product sales volume, continue to develop middle and high-end terminal customers, the company's boutique strategy results. In addition, the company continues to tap the potential to reduce costs, we are optimistic about the development of the company. Considering the sharp rise in 21H1 steel prices under the economic recovery, we slightly raise the relevant assumptions, and it is estimated that the company's EPS for 21-23 years will be 1.04 plus 1.09 yuan, which is comparable to 4.93 times the company's PE (2021E). Considering the company's regional advantages, it will give the company 5.5x PE (2021E) with a target price of 5.69 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.
