Main points of investment:

Maintain the "overweight" rating. In the first half of 2021, the company realized operating income of 9.867 billion yuan, up 34.12% from the same period last year, and realized net profit of 1.477 billion yuan, up 79.84% from the same period last year. The company's performance exceeded expectations.

Maintain the company's 2021-23 EPS forecast of 1.30Universe 1.33Universe 1.34 yuan, maintain the company's target price of 11.42 yuan, and maintain the "overweight" rating.

The output has been released and the performance has reached the best level in history. The company's steel sales in the first and second quarters were 89 and 1.17 million tons respectively, the gross profit per ton of steel was 973 yuan and 1230 yuan per ton respectively, and the corresponding net profit per ton of steel was 621 yuan and 792 yuan per ton, respectively. the company's performance in the first half of 21 years is the best in the company's history and its profitability leads the industry.

We believe that the company has excellent management, and under the background of the rise of the profit center of the industry, the company's profits will maintain a good level.

Adjust the debt structure and keep expenses low. At the end of June 21, the company's asset-liability ratio was 56.92%, an increase of 25.77 percentage points compared with the end of 2000. The increase in the company's asset-liability ratio was mainly due to the adjustment of the debt structure and the increase of short-term loans and notes payable, and the scale of the company's interest-bearing liabilities did not change much.

The company's financial expense rate in the second quarter was-0.6%, which remained at a low level. The management ability of the company is strong, and we expect the company expenses to remain low.

The company traverses the cycle through a low-cost expansion strategy. Under the background of carbon neutralization, the growth logic of the industry or company has been switched to the endogenous growth of individual "fine management to reduce costs". The company adopts a unique low-cost expansion strategy to achieve capacity expansion and value creation through continuous output management through epitaxial mergers and acquisitions. We believe that the company's production capacity and performance will achieve fluctuating growth.

Risk tips: a sharp macroeconomic downturn; unpredictable safety accidents.