This report is read as follows:
The company's results in the first three quarters of 2022 were in line with expectations, the company's cost pressure was relieved and gross profit margin recovered. We expect that with the commissioning of the company's raised production capacity, product structure optimization will lead to a steady improvement in profitability.
Main points of investment:
Maintain the "overweight" rating. In the first three quarters of 2022, the company achieved revenue of 887 million, an increase of 8.64% over the same period last year, and a net profit of 47 million, an increase of 46.33% over the same period last year. Taking into account the rising demand in the lower reaches of the company, the EPS of the company in 2022-2024 is increased to 0.62 yuan 1.131.6 yuan (the original 0.62 pound 0.77 yuan 0.86 yuan), and the corresponding return net profit is 0.62 pound 1.13 billion yuan respectively. Refer to similar companies, taking into account the rising prosperity downstream, give the company a valuation of 4.5 times PB in 2022, raise the company's target price to 37.13 yuan (formerly 32.76 yuan), and maintain the "overweight" rating.
The prosperity of the lower reaches rises, and the performance continues to be released. In the first three quarters of 2022, the company's revenue was 2.64,3.1 and 313 million yuan respectively, and its net profit was 0.13,0.16 and 18 million yuan respectively. Benefiting from the sharp increase in capital expenditure in the thermal power industry, the downstream prosperity of the company has increased, the company's orders are good, and we expect the company's profitability to continue to rise.
Cost pressure eased and gross profit margin recovered. Raw materials account for more than 75% of the company's costs, and steel prices have been strong in 21 years, while steel prices have been stable in 22 years. The company's sales gross profit margin in the first three quarters was 13.66%, an increase of 2.66 percentage points over the whole of 21 years, and the company's profitability recovered. In the context of rising prosperity downstream, we expect that cost will no longer be a suppressing factor for the company's performance.
The small diameter high pressure boiler tube is in the lead in China, and the production capacity will be released gradually. From 2019 to 2021, the output of seamless tubes of small diameter power station boilers ranks among the top three in China. In 2021, the market share of small diameter alloy steel tubes for power station boilers is close to 50%, and the company leads the industry in the field of subdivision. The company's original production capacity is about 100000 tons, and the fund-raising project has a production capacity of 40,000 tons. after it was put into production in 23, the proportion of the company's high-end products has increased, and the performance will continue to be released.
Risk hint: the price of raw materials has risen sharply, and the progress of fund-raising and production has not been as expected.
