This report is read as follows:
The company's results in the first three quarters of 22 years were lower than expected. The company adheres to the special boutique strategy, the boutique capacity continues to improve, and its profitability is expected to continue to enhance; the company intends to acquire Kunlun technology, this acquisition will enable the company's long-term development.
Main points of investment:
Maintain the "overweight" rating. In the first three quarters of 22, the company achieved revenue of 27.33 billion yuan, down 18.44% from the same period last year; the net profit returned to the mother was-670 million yuan, down 140.40% from the same period last year, and the performance was lower than expected. Taking into account the pressure on both ends of the company's revenue and cost, the company's EPS forecast for 2022-24 is-0.27max 0.28max 0.57RMB (the original 0.81max 0.83max 0.85RMB), and the corresponding return net profit is-6.65pm 1.387 billion yuan respectively.
Taking into account the plate valuation adjustment, with reference to similar companies to give the company 22 years 0.9 times PB valuation, downgrade the target price to 3.83 yuan (the original 5.11 yuan), to maintain the "overweight" rating.
Short-term performance is under pressure and is expected to recover gradually in the later stage. Over the past 22 years, overall demand has been weak, and steel prices have shown a concussive downward trend; although raw material prices have fallen somewhat after a sharp rise, the overall price decline is lower than that of finished wood prices, constantly squeezing the company's profit margins. At the end of the first-third quarter of 22, the company's gross profit margin was 6.61%, 5.75% and 1.96% respectively, and the company's gross margin continued to decline and its 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 company's profits are expected to recover gradually.
Adhere to the characteristic boutique strategy, high value-added products have outstanding benefits. In the first half of 22, the company's production and sales of 500MPa grade high-strength steel bars increased by 74000 tons compared with the same period last year, with an increase of 219%. The rapid promotion of high-strength steel bars above 600MPa grade has been confirmed as a batch application project, and the production and sales of LNG low-temperature steel bars have also achieved a historic breakthrough. The company continues to adhere to the boutique strategy, quality capacity continues to improve, which is conducive to the promotion of profitability.
Based on long-term development, acquire Kunlun science and technology. On October 27, 22, the company announced that it plans to acquire 100% stake in Kunlun Technology held by Zhongnan Iron and Steel of Baowu Group for 68.26 million yuan. This acquisition will help the company to make better use of the IT technology advantages of Kunlun Technology, enhance the level of intelligence, reduce costs and increase efficiency, and will help the company to become a high-tech company with iron and steel as the value carrier, which is conducive to the company's long-term development.
Risk hint: raw material prices have risen sharply; downstream demand has fallen sharply.