Main points of investment:
Maintain the "overweight" rating. In the first three quarters of 2021, the company achieved revenue of 33.507 billion yuan, an increase of 48.49% over the same period last year, and a net profit of 1.659 billion yuan, an increase of 32.64% over the same period last year. Taking into account the impact of production restrictions and power restrictions and other factors, the company's EPS forecast for 2021-2023 is 0.90Universe 1.06 yuan (the original 1.20 PE 1.53 yuan 1.67 yuan). With reference to similar companies, the company's 2021 PE is valued 6 times, and the company's target price is reduced to 5.40 yuan (original 7.2yuan) to maintain the "overweight" rating.
The financial structure has been continuously optimized and the cost has continued to decline during the period. By the end of the third quarter of 21, the company's asset-liability ratio was 52.29%, 1.01 percentage points lower than that of the same period in 20 years, and the company's financial structure was constantly optimized.
In the first three quarters of 21, the company's expense rate was 0.82%, down 0.6% from the same period last year, of which the sales, management and financial expense rates were 0.34%, 2.73% and-0.04% respectively, down 0.13%, 1.07% and 0.26% respectively from the same period last year. The company's ability to manage and control expenses continues to improve, and the expense rate continues to decline during the period.
The leading position of the region is stable, and the market share continues to increase. The company is the largest long wood manufacturer in Guangdong Province. 2021H1 has a crude steel output of 4.12 million tons, accounting for about 23% of the total crude steel output in Guangdong Province. At the same time, Guangdong Province is the company's main steel sales market, the company's regional leading position is solid, and its market share in Guangdong Province is increasing rapidly, according to the company's announcement, by the end of June 2021, its market share of high-grade rebar in Guangdong has increased from 25% to 50%.
The company is expected to fully benefit from the new development trend of rapidly increasing concentration in the iron and steel industry. In the context of carbon neutralization, we believe that the concentration of the iron and steel industry will increase rapidly, and the bargaining power and cost advantage of leading steel enterprises will be gradually highlighted. As a regional leading steel enterprise in Guangdong Province, the company is expected to fully benefit from the new development trend of rapid increase in industry concentration.
Risk tip: real estate demand fell sharply and monetary policy tightened more than expected.