Production is limited, and the performance in the third quarter is lower than the previous quarter.
In the first three quarters of 2021, the company benefited from industry opportunities, with operating income of 48.66 billion yuan, up 38.3% from the same period last year, and net profit of 3.36 billion yuan, up 70.1% from the same period last year. In the third quarter, the company's production was limited, with quarterly crude steel output of 2.787 million tons, down 10.0% from the previous quarter, superimposed by the adverse impact of a sharp rise in coke prices, and the company's performance declined. The operating income in a single quarter was 17.57 billion yuan, an increase of 6.1% over the previous quarter, and the net profit returned to the mother was 630 million yuan, down 65.2% from the previous quarter.
The plan of capacity replacement has been announced, and the purchased capacity in Xinjiang has been applied.
On October 26, the Fujian Provincial Department of Industry and Information Technology announced the replacement plan of Minguang production capacity of No. 3 Steel. According to the plan, the company will withdraw its steel production capacity of 3.85 million tons and iron production capacity of 3.665 million tons, including the purchase of steel capacity of 1 million tons in Xinjiang. Two 100t converters are built in Minguang, Quanzhou, one converter is built in Minguang, Luoyuan, and two 1950m3 blast furnaces are built at our headquarters, with a total steel capacity of 3.55 million tons and iron capacity of 3.318 million tons. The project is planned to be built from 2021 to 2025, and the company's main iron and steel industry will continue to strengthen development in the future.
The supply of the industry is strictly controlled, and the profit is still at a high level.
At present, the industry supply is declining sharply, the autumn and winter production restrictions in the fourth quarter are about to begin, and the Winter Olympic Games are just around the corner, and production restrictions in key areas are expected to continue. Under the background of weak demand, on the one hand, the sharp decline in crude steel production supports steel supply and demand, and steel inventory continues to be eliminated; on the other hand, it suppresses raw material demand and suppresses raw material prices, resulting in a pattern of both supply and demand. Industry profits are relatively booming. The company is located in Fujian, and the price of local long wood is higher than that in the north for a long time, especially in winter. The construction difference between the north and the south will further widen the price gap, which is beneficial to the company's profit.
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 and steady dividend. Taking into account the impact of the crude steel production flat control policy on the company's output, we lowered our performance forecast. It is estimated that the company's 2021-2023 net return to home is 40.8 pound 41.6max 43.3 (the original forecast is 46.2 Universe 4.91 billion yuan), a year-on-year growth rate of 59.6 percent, 2.0 percent, 4.0 percent, diluted EPS of 1.7 percent, 1.8 yuan, and the current share price maintains an "overweight" rating, corresponding to PE 4.3, 4.2 and 4.0x.