Core ideas:
Shougang shares: positioning high-end plates, adhere to the "boutique + service" strategy to optimize the structure, and build listed steel enterprises with international competitiveness and influence. In 2021, the total equity crude steel production capacity is 21.7 million tons, and the output / profit of the three strategic products of electrical steel, automobile plate and tinplate account for 26% and 40% respectively.
Strategic products: electrical steel, automobile plate and tinplate have outstanding advantages, focusing on the development of high-end products, fully benefit from the downstream high-view demeanor. (1) Electrical steel continues to lead: the technical barrier of electrical steel is high, the period of development and certification is 6-10 years, the downstream energy efficiency is improved, and the volume of new energy vehicles promotes demand growth.
The company has a production capacity of 1.5 million tons, ranking second in the country in 2021, with the first (60%) and second (26%) domestic market share of some thin specification, high magnetic induction orientation and high brand of new energy vehicles, with the goal of expanding production to 200-2.5 million tons to improve the proportion of oriented electrical steel and non-oriented high grade electrical steel 30PCT.
(2) Automobile plate is refined and strong: the production capacity of automobile plate is 6 million tons. Since 2015, the company's automobile plate output CAGR13% has far exceeded the national automobile output (1%). The domestic market share is the second, focusing on the development of advanced high-strength steel automobile plate. (3) High-end breakthrough of tinplate: positioning high-end food packaging, the output has increased steadily since 2016, the domestic market share is the second, and the capacity utilization rate is 120% in 2021.
Core competitiveness: strong independent R & D ability to support strategic products from behind, high magnanimity, high concentration to enhance profitability. The country's first full-process ultra-low emission steel enterprise, ahead of the layout of green environmental protection, carbon neutralization under the background to ensure stable production. Additional issuance to achieve a wholly-owned holding of Jingtang Company, increase the capital of Zhixin Company, help to expand the production of high-end electrical steel. Shougang Group unlisted crude steel production capacity of 12.63 million tons, accounting for 37%. Provide equity incentives to the core team, mobilize the enthusiasm of employees, and promote the medium-and long-term steady development of the company.
Profit Forecast and Investment suggestion: it is estimated that the company's EPS in 2022-2024 will be 1.03 yuan per share, corresponding to the closing price on May 27, 2022, and 3.28 times the PE in 2022-2024. With reference to the comparable company valuation, the company is given a "buy" rating of 7 times PE in 2022, corresponding to a fair value of 7.24 yuan per share in 2022.
Risk hint. Macroeconomic fluctuations; iron ore, coking coal coke output is not as expected; environmental production limit is higher than expected; automobile plate, electrical steel demand is lower than expected; new production capacity is not as expected.