This report is read as follows:
The company is a leading iron and steel enterprise in Anhui, with a balanced product structure and obvious location advantages. The synergy effect of joining Baowu Group is gradually released, and high value-added products will contribute to the increment of the company.
Main points of investment:
Coverage for the first time, giving the company an "overweight" rating. The company is a leading iron and steel enterprise in Anhui region. we estimate that the EPS of the company in 2022-2024 will be 0.780.82 PE 0.88 yuan respectively. With reference to similar companies, we will give the company a valuation of 6.5X per share in 2022. Coverage for the first time, giving a "overweight" rating.
Anhui iron and steel leading enterprises, you special steel products gradually. The company is a leading iron and steel enterprise in Anhui, which has formed a product structure of "special steel, axles, long wood, plate and strip". Long wood and plate contribute more than 80% of the company's revenue and gross profit. The company's H-beam products have successfully opened up foreign markets, and we expect the overseas market share of this product to expand steadily. In addition, as the company's technical advantages in H-section steel, axle steel, non-oriented silicon steel, new special steel and other excellent products gradually appear, it is expected that the optimization of the company's product structure will continue to hit the ground, and the company's overall competitiveness will continue to strengthen.
Baowu helps to reduce cost and improve efficiency, environmental protection and consumption reduction continue to make efforts. The company joined Baowu Group in 2019. Since then, with the assistance of Baowu Group, the company has continuously promoted measures such as production line coordination, intelligent control and scientific and technological innovation, and achieved remarkable results in reducing cost and increasing efficiency. In 2021, the total number of employees of the company decreased by 28.56% compared with 2019, and the expense rate during the period decreased by 3.22% compared with 2019. The company insists on implementing the ultra-low emission transformation plan of environmental protection, the comprehensive energy consumption per ton of steel and waste gas emissions per ton of steel continue to decline, and the profitability of the company continues to improve.
The downstream demand is improving and the performance is gradually released. "steady growth" led to a substantial increase in infrastructure investment, real estate demand bottomed out and rebounded, leading to a rebound in steel demand in the field of home appliances. With the solution of the core shortage problem, the automotive industry gradually warms up, superimposed the development of new energy vehicles to increase steel demand, other manufacturing demand is stable, steel downstream demand market has been improving for a long time, the company as a steel leader, it is expected that the company's performance will be gradually released.
Risk hint: raw material prices have risen sharply, and production restrictions have been strengthened.