Introduction to this report:
The company's 2021 annual results are in line with expectations. The company continues to optimize its product structure, insists on reducing costs and increasing efficiency. Its profitability has steadily increased, and its performance continues to be released. The company's low-cost expansion strategy continues to advance, and its growth will span the cycle.
Key points of investment:
Maintain an “increase in holdings” rating. The company achieved revenue of 21.689 billion yuan in 21, an increase of 30.59% over the previous year; Guimu's net profit was 2,732 billion yuan, an increase of 27.65% over the previous year. The company's performance was in line with expectations. We forecast that the company's net profit to the mother in 22-24 was 2,874, 28.95, and 2,929 billion yuan respectively, up 5%, 1% and 1%, respectively; maintaining the company's 2022-2023 EPS forecast at 1.33 and 1.34 yuan, adding the 2024 EPS forecast to 1.36 yuan, maintaining the company's target price of 11.42 yuan, maintaining the company's target price of 11.42 yuan, maintaining the “increase in holdings” rating.
Dig deep into benchmarks to continuously reduce costs and increase efficiency. Through vertical and horizontal benchmarking, the company strengthens its own cost efficiency process control and insists on reducing costs and increasing efficiency. The company's annual expenses for one ton of steel in 2021 (excluding R&D expenses) were 123 yuan/ton, down 5.88% from the previous year, the lowest level in nearly 5 years. Among them, the sales expenses of tons of steel were 11.31 yuan/ton, a year-on-year decrease of 58.75%; the financial expenses of tons of steel were -38.96 yuan/ton, a year-on-year decrease of 16.81%, the lowest level in nearly 5 years, and the company's fine management capabilities continued to improve.
Product structure optimization, increased profitability. The company continues to implement a strategy to improve brand quality. It has developed the strongest EF1900YT bullet in China. It has passed road verification and achieved batch delivery, and the product structure continues to be optimized. In '21, the company's steel industry sold 4,4208 million tons, down 0.33% from the previous year; gross profit per ton of steel was 980 yuan/ton, up 15% year on year, and net profit of tons of steel was 618 yuan/ton, up 28% year on year. The company achieved performance growth even when production fell slightly year on year, showing strong profitability.
The company is undervalued and has high dividends, and is an extremely cost-effective longwood leader. In the context of the “steady growth” policy and the shift in the industry to a low peak season, demand for construction steel will grow more than expected, and the sector is expected to respond to the recovery market.
The company's 21-year dividend rate is 87.6%, and the corresponding dividend rate is 12.9%. The company takes into account high dividends, excellent management, and low costs, but the valuation is underestimated. We think the company is a leading target for extremely cost-effective Changzai.
Risk warning: sharp macroeconomic decline; unpredictable safety incidents.