This report is read as follows:
The results for the first three quarters of 22 years were lower than expected. The company will increase investment in environmental protection and speed up the implementation of environmental protection transformation projects, which will help to enhance its sustainable development ability. at the same time, the company has participated in the fixed increase of tungsten in Xiamen and is expected to benefit from the high prosperity of lithium batteries in the future.
Main points of investment:
Maintain the "overweight" rating. In the first three quarters of 22, the company achieved revenue of 39.9 billion yuan, down 18% from the same period last year, and its net profit was 75 million yuan, down 97.77% from the same period last year, and the performance was lower than expected. Considering the pressure on both ends of the company's revenue and cost, the company's EPS in 2022-24 is estimated to be 0.03, 0.17, 0.36 yuan (formerly 0.56, 0.61, 0.63), and the corresponding return net profit is 0.75, 428, 882 million, respectively. Consider the plate valuation adjustment, with reference to similar companies to give the company 22 years 0.6 times PB valuation, downgrade the target price to 5.74 yuan (the original 7.28 yuan), to maintain the "overweight" rating.
Short-term performance is under pressure and is expected to recover gradually in the later stage. In 22 years, the overall demand was weak, and steel prices showed a concussive downward trend; although raw material prices fell somewhat after a sharp rise, the overall raw material price drop was lower than that of finished material prices, constantly squeezing the company's profit margin at the end of the first-third quarter of 22 years. The company's gross profit margin was 10.01%, 7.43% and 4.72% respectively, the company's gross profit margin continued to decline, and the performance was under short-term pressure. However, we believe that in the context of steady growth, the resilience of steel demand is still there, and the profits of the company's steel sector are expected to recover gradually.
Increase investment in environmental protection and enhance the ability of sustainable development. In the past 22 years, the company has significantly increased investment in environmental protection and accelerated the implementation of environmental protection transformation projects. In the first half of 22 years alone, the company has invested about 549 million yuan in environmental protection, accounting for 96% of the total investment in 21 years. In the later stage, with the gradual use of various upgrading and transformation projects of the company, its ability to control and control pollution will be significantly improved, which is conducive to the company's long-term sustainable development.
Participation in Xiamen tungsten Xinneng will benefit from the high landscape demeanor of lithium-ion batteries. The company participates in subscribing for 5597537 shares of Xiamen Tungsten Xinneng with 400 million yuan, and now holds 1.86% of Xiamen Tungsten Xinneng shares. Xiamen Tungsten Xinneng raised a total of 3.5 billion yuan, mainly for its lithium-ion battery material expansion project. In the future, the company is expected to benefit from the high prosperity of lithium-ion batteries.
Risk tips: raw material prices have risen sharply; steel demand has fallen sharply.