Summary of events: on March 30, the company released its 2021 annual report: in 2021, the company achieved revenue of 136.674 billion yuan, an increase of 35.45% over the same period last year; net profit of 6.925 billion yuan, an increase of 250.10% over the same period last year; and net profit of 6.941 billion yuan, an increase of 251.44% over the same period last year. From a quarterly point of view, 2021Q4, the company achieved revenue of 28.137 billion yuan, down 5.36% from the same period last year; net profit from home was-564 million yuan, down 186.37% from the same period last year; and net profit from non-return was-624 million yuan, down 191.23% from the same period last year.
Comments: steel output increases slightly, gross profit margin increases
① volume: steel production in 2021 increased by 0.94% compared with the same period last year, while sales decreased by 0.85%. In 2021, the company produced 25.35 million tons of iron, down 2.01 percent from the same period last year; 26.47 million tons of steel, down 0.04 percent from the same period last year; 24.8 million tons of steel, an increase of 0.94 percent over the previous year; and sales of 24.4 million tons of steel, a decrease of 0.85 percent over the previous year, achieving a steel production and sales rate of 98.39 percent.
② price: the company implements cost reform and increases gross profit margin. In 2021, the price of iron ore, the main raw material, is + 49.06%, the price of main coking coal is + 80.75%, the price of coke is + 50.08%, and the price of scrap is + 29.69%. However, through the implementation of cost reform, the company estimated that the actual cost per ton of steel only increased by 36.20%. And the actual selling price of the products increased by about 36.69%, resulting in the company's overall gross profit margin rising to 9.69% in 2021.
Future core focus: equity incentives and high dividends demonstrate the confidence of the company. ① equity incentive plan will help the company's long-term development. The company buys back shares from the secondary market for equity incentives, and in terms of performance evaluation conditions, it makes requirements on the cash return rate of the company's total assets, profits and labor productivity of the main steel industry, which will promote the common interests of the company and the core backbone, enhance the company's management capacity and production efficiency, help the company in the long run, and demonstrate the company's confidence in future development.
② returns shareholders with a high dividend yield. The profit distribution plan of the company in 2021 is based on the total number of 9402611828 shares with distribution rights, and distributes cash dividends of 2.21 yuan (including tax) to all shareholders of the company for every 10 shares, and the total cash dividend is 2.078 billion yuan, accounting for 30.01% of the net profit belonging to shareholders of listed companies, and the dividend yield is as high as 5.89%.
③ has outstanding advantages in ensuring strategic resources. In 2021, the Platts price index of iron ore rose by 49.06%, while Anshan Iron and Steel Group Mining Company holds 8.8 billion tons of iron ore resources; it has a production capacity of 280 million tons per year, 6500 tons per year for mineral processing and 22 million tons for iron concentrate, ranking first in China. In addition, Angang Group has an annual production capacity of 8 million tons of Karara iron ore base in Australia, which provides a strong resource guarantee for the company's production and operation.
Profit forecast and investment suggestions: the company strives to promote the continuous optimization of the variety structure; deepen the layout of the industrial chain, and the performance is expected to maintain stable growth. We estimate that the return net profit of the company from 2022 to 2024 will be 79.36, 85.71 billion yuan, respectively, and the PE corresponding to the closing price on March 31 will be 4x, 4x and 3x, which will be covered for the first time and given a "recommended" rating.
Risk tips: rising prices of raw materials, lower-than-expected demand, COVID-19 epidemic continued to affect.