This report is read as follows:
2022H1's performance was slightly lower than expected. The company's fine management ability is leading in the industry, the cost is at a low level in the industry, and its profitability and stability are significantly better than those in the industry. We believe that the company is a cost-effective leader of long materials.
Main points of investment:
Maintain the "overweight" rating. 2022H1 achieved revenue of 13.306 billion yuan, up 34.85% from the same period last year, and its net profit was 927 million yuan, down 37.25% from the same period last year. Taking into account the decline in raw material prices in the first half of the year and the rise in raw material prices, the company's EPS forecast for 2022-24 is 0.85, 0.93, 0.99 (the original 1.33, 1.34, 1.36). Taking into account the weak demand in the first half of the plate valuation adjustment, with reference to similar companies to 22 years 10 times PE valuation, downgrade the target price to 8.50 yuan (the original 9.94 yuan), to maintain the "overweight" rating.
The establishment of a new wholly-owned subsidiary is conducive to the operation and development of the company. The company uses its own funds to contribute to the newly established wholly-owned subsidiaries Nanchang Fangda Special Steel Research Center Co., Ltd. and Ningbo Changli International Trade Co., Ltd., with registered capital of 32000 yuan and 30 million yuan respectively. The establishment of two new subsidiaries will help to improve the company's R & D and innovation mechanism, and help to further improve the company's sales management level.
During this period, the expense rate has reached a new low, and the meticulous management ability is leading in the industry. The cost of the company is at a low level in the industry and has hit a 10-year low in a row: the expense rate during the period from 2020 to 21 was 3.88% and 2.94% respectively, down 5.26% and 0.94% respectively from the same period last year; and the expense rate of the 2022H1 Company further dropped to 2.29%, 0.65% lower than that of 21 years, setting a new low for nearly a decade. The company insists on reducing costs and increasing efficiency through vertical and horizontal benchmarking, and constantly improves the fine management ability of cost-effectiveness.
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 that construction steel demand is still expected to grow faster than expected in the later period, and the plate 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; downstream demand for construction steel continues to decline.