This report is read as follows:
The company's first-quarter results in 2022 are in line with expectations. The company insists on reducing costs and increasing efficiency, and steadily improves profitability. In the future, the company will also adhere to an efficient external expansion strategy. We think the company is a cost-effective construction steel leader.
Main points of investment:
Maintain the "overweight" rating. The company achieved revenue of 5.232 billion yuan in the first quarter of 21, an increase of 29.46% over the same period last year. Due to the sharp rise in raw material prices and other factors, the company's net profit was 541 million yuan, down 2.08% from the same period last year, and the performance was in line with expectations. We maintain the company's EPS forecast for 2022-2024 of 1.33 yuan 1.34pm 1.36 yuan, corresponding to the 2022-2024 return net profit of 2.874pm 28952.2929 billion yuan, respectively, an increase of 5%, 1%, 1%, respectively, compared with the same period last year; maintain the target price of 11.42 yuan, and maintain the "overweight" rating.
Continue to reduce costs and increase efficiency and improve profitability. The company's cost is at a low level in the industry. 2022Q1's expense rate during the sales period was 2.76%, down 0.7% from the same period last year, a record low, with sales and management expenses down 0.61% and 0.68% respectively compared with the same period last year. The company insists on reducing costs and increasing efficiency through vertical and horizontal benchmarking, and constantly improves its ability of fine management of cost-effectiveness.
The partnership to set up an investment fund for the iron and steel industry will help the company to continue to become bigger and stronger. The company and the related party Shanghai Huxu Investment Management Co., Ltd. (hereinafter referred to as "Shanghai Huxu") jointly set up Nanchang Huxu Iron and Steel Industry Investment Partnership (limited partnership), with a total fund size of 10 billion yuan (whichever is the actual amount to be raised in the future), the company plans to contribute 4 billion yuan as LP, and Shanghai Huxu serves as GP. Under the background of "production restriction" in the industry, the company's independent expansion capacity is limited, and the establishment of the fund will help the company to achieve its own scale expansion through foreign mergers and acquisitions and participation in mixed reforms in the future.
Low valuation superimposed high dividend, the company is a very cost-effective leader of the long-term material. In the context of the "steady growth" policy, we expect construction steel demand to grow faster than expected in 2022, and the sector is expected to meet the repair market.
The 21-year dividend rate of the company is 87.6%, and the corresponding dividend rate is 12.9%. The company takes into account high dividend, excellent management and low cost, but the valuation is on the low side. We think the company is a leading target of construction steel with high performance-to-price ratio.
Risk tips: a sharp decline in the macro-economy; a decline in downstream demand for construction steel.