This report is read as follows:
The company's performance in 2021 is in line with expectations. The 21-year cost pressure is great, but the company optimizes the hedging through the product structure. We expect that as the company invests in high-end production capacity, the company's output and gross margin per ton of products will further increase.
Main points of investment:
Maintain the "overweight" rating. In 2021, the company achieved operating income of 1.123 billion yuan, an increase of 27.44% over the same period last year, and a net profit of 52 million yuan, an increase of 0.46% over the same period last year. Maintain the forecast of the company's EPS of 0.62 and 0.77 yuan in 2022-23, and increase the EPS forecast of 2024 to 0.86 yuan, corresponding to the 2022-24 net profit of 0.62 won. Maintain the company's target price of 32.9 yuan and maintain the "overweight" rating.
Product structure optimization, fund-raising and production can continue to increase the proportion of high-end products. In 2021, the company's sales of stainless steel seamless tubes and steel panels totaled 111200 tons, an increase of 6800 tons over the past 20 years. The company's sales of high-end products increased significantly in 2021, partly hedging the impact of rising prices of raw materials. The original production capacity of the company is about 100000 tons, and the production capacity of high-end stainless steel seamless tubes is 5000 tons. After 23 years of production, the proportion of the company's high-end products will continue to increase.
The cost pressure may ease gradually. Although the company's raw material steel prices have continued to rise in the past 21 years, the company has effectively reduced the impact of rising costs by widening raw material procurement channels and other measures. In the past 21 years, the sales, gross profit and net profit of the company's per ton products were 10100 yuan, 1111 yuan and 471 yuan per ton respectively, of which the gross profit per ton product increased by 22 yuan per ton, while the net profit per ton product decreased by 28 yuan per ton. The trend of steel prices has been relatively stable in the past 22 years, and we expect the pressure on raw materials to ease gradually.
Excellent steel pipe manufacturer, small mouth very high pressure boiler tube output of the top three in China. The company's main products are stainless steel and alloy steel pipes and steel panels. The output of seamless tubes of small diameter power station boilers ranks among the top three in China from 2018 to 2020. The company continues to develop high-end steel pipe varieties to enrich its own production lines and improve the competitiveness of products. We expect that the high-end of the company's products will continue and the profitability will gradually increase.
Risk hint: the price of raw materials has risen sharply, and the progress of fund-raising and production has not been as expected.
