The 2021 performance is in line with the previous forecast, and the 1Q22 performance is in line with the expected 2021 and 1Q22 results: 2021 revenue of 149.626 billion yuan, year-on-year + 39.0%; homing net profit of 2.688 billion yuan, + 58.3% of the same period last year. 1Q22 revenue 31.103 billion yuan, year-on-year-5.8%, month-on-month + 11.6%; return to the mother net profit of 312 million yuan, year-on-year-35.3%, month-on-month-2.4%. The 2021 performance is in line with the previous forecast, and the 1Q22 performance is in line with expectations.
1) the profitability of steel reached an all-time high. In 2021, the company's steel sales were + 8.8% to 25.548 million tons compared with the same period last year. We estimate that the average selling price / gross profit per ton of steel is 4987max 590 yuan / ton, which is a record high of 30.7% compared with the same period last year. 2) the volume and price of the chemical sector rose, but the gross profit margin fell. Thanks to the sales volume of vanadium products from + 9.0% to 16200 tons year-on-year, and the price per ton increased by more than 20%, the company realized vanadium product revenue of 1.71 billion yuan, + 30.9% year-on-year. However, due to the rise in raw material prices to high production costs, the gross profit margin of vanadium products fell 9.8pct to 23.9%. 3) the ability of cost control continues to improve. The expense rate during the 21-year period of the company is from-1.37pct to 8.6%. Except for the reclassification of freight to operating costs, the financial and management expenses have been optimized; the expense rate during the 1Q22 period is year-on-year-0.5pct to 7.0%, and the company's cost control capability continues to improve. 4) the cash flow improves with the increase of profits, and the asset quality remains stable. In 21 years, the company's operating net cash flow was 14.702 billion yuan, + 91.3% compared with the same period last year, mainly due to a sharp rise in the price of steel products, resulting in an increase in cash received for the sale of goods and services. At the same time, the company's asset quality remained stable, and the company's asset-liability ratio decreased slightly from + 0.03pct to 74.98% to 74.98% to 74.85% at the end of 21.
Trend of development
With the continuous optimization of product structure and the continuous improvement of brand influence, the company's product profit center is expected to move up. For 21 years, the company has continued to develop high-end products, a number of products to fill the domestic gap, and gradually achieve import substitution, some of the products are used in the "Hualong No. 1" project, Winter Olympic venues and other key projects. In addition, in the past 21 years, the company has comprehensively launched the marketing model of "Marketing Center + Regional Company", and has successfully developed high-end customers such as GM, Tesla, Inc., Beijing Futian Daimler and so on. We believe that the continuous optimization of product structure and brand image is expected to drive the company's product medium-and long-term profit center upward.
The profit distribution of 2Q industry chain is expected to be balanced again, and the company's profit is expected to pick up. 1Q22 black industry chain profits tilted upstream, the company's performance has declined. We believe that under the influence of "steady growth" and export boost, 2Q steel downstream demand is expected to recover, in the context of low supply elasticity, steel supply and demand will produce a more obvious marginal improvement, furnace charge price elasticity will be weaker, and the company's profits are expected to pick up.
Profit forecast and valuation
We keep our profit forecast for 2022 Universe 23 unchanged. The company's current share price corresponds to 22max 23e 10.1x/10.3xP/E. We keep our neutral rating and target price unchanged at 3.1RMB, corresponding to 22max 23e 12.7x/13.0xP/E, implying 26.0% upside space.
Risk
The decline of the real estate economy is higher than expected; the development of the epidemic is higher than expected.