Incident: The company released its 2022 annual report and its report for the first quarter of 2023. Total operating income for 2022 was 1,207 million yuan, an increase of 7.47% over the same period last year; net profit attributable to shareholders of listed companies was 73.455 million yuan, an increase of 40.32% over the same period last year; net profit attributable to shareholders of listed companies after deducting non-recurring profit and loss was 71,43881 million yuan, an increase of 63.87% over the same period last year; basic earnings per share were 0.73 yuan. Revenue for the first quarter of 2023 was 305 million yuan, an increase of 15.47% over the previous year; net profit attributable to shareholders of listed companies was 2012 million yuan, an increase of 53.71% over the previous year; basic earnings per share were 0.2 yuan.
The demand boom was compounded by improvements in the product structure, and net profit continued to rise in a single quarter. The quarterly net profit growth rate of the company's 202Q1-2023Q1 was 11.81%, 64.96%, 66.97%, 30.71%, and 53.71%, respectively; the quarterly revenue growth rate of 2022Q1-2023Q1 company was 27.84%, 6.86%, -2.14%, 4.37%, and 15.47%, respectively; although the company's metal products sales in 2022 fell 7.43% year on year, benefiting from the rise in the average sales price of the company's products, the steady increase in raw material prices, and gross profit growth brought about by steel Product sales increased, and the company's net profit continued to increase in 2022. According to the annual report, the company's S30432 (high-grade stainless steel) products completed orders for more than 5,500 tons in 2022, accounting for more than 50% of the domestic S30432 small-caliber pipe market share.
Revenue and net profit returned to the mother in 2022 reached record highs, and profitability improved across the board. The company's total revenue in 2022 was 1,207 million yuan, and net profit returned to the mother was 773 million yuan, all of which reached record highs; the company's Q1-Q4 quarterly sales gross margins were 14.16%, 14.01%, 12.88%, and 10.64% respectively, and continued to be at a high level; Q1-Q4 quarterly expense ratios for the quarterly period were 7.95%, 6.77%, 6.71%, 5.63%, and the share of expenses declined quarterly; Q1-Q4 quarterly sales margin was 4.96%, 5.01%, 5.90%, 8.24%, respectively, net sales Interest rates have improved markedly.
Net profit increased sharply in the first quarter of 2023, and fund-raising projects will soon be put into production and volume. The company's net profit for the first quarter of 2023 was 0.2 billion yuan, up 53.71% year on year, gross sales margin was 15.01%, and net sales margin was 6.60%. According to preliminary estimates, the company's sales volume of stainless steel products in the first quarter increased by 53.03% compared to the same period last year. According to company announcements, the total production capacity allocation and production volume of stainless steel and alloy steel seamless steel pipes for special equipment in fund-raising projects was determined according to specific market conditions and customer needs. The daily fundraising project for issuing annual reports has reached the expected state of use. It is expected that the company's new production line will soon be put into operation, and the product structure is expected to be further improved, thereby increasing the company's gross margin level.
The company disclosed large orders, and it is expected that the approval and commencement of coal power will gradually be implemented. According to the company's announcement on March 16, the company received the “Notice of Winning the Bid” from the bidding unit, Dongfang Electric Group Dongfang Boiler Co., Ltd., which confirmed that the company was the winning bidder for “300 tons of threaded pipes in power plant service in 2022”. The winning bid amount was about 19.1501 million yuan, accounting for 17.65% of the company's audited revenue in 2021. According to the announcement of Changbao Co., Ltd., the National Development and Reform Commission will approve 80 million kilowatt coal power projects every year in 2022 and 2023; it is expected that with the increase in demand brought about by the gradual entry of pre-approved projects into the construction stage and the gradual release of production capacity for new production lines, the company's thermal power steel pipe related business is expected to experience a sharp rise in volume and price, and performance is expected to increase significantly.
Investment advice. The company focuses on seamless steel pipe manufacturing for small-caliber energy. While production capacity is expanding, downstream demand continues to improve and effectively supports its profit release, and the increase in the share of high-end products is expected to support its higher valuation. We expect the company to achieve net profit of 198 million yuan, 293 million yuan, and 376 million yuan respectively from 2023 to 2025, corresponding to PE 16.9, 11.5, 8.9 times, maintaining the “buy” rating.
Risk warning: Prices of upstream raw materials have fluctuated greatly, demand for seamless steel pipes has fallen short of expectations, and there is uncertainty about new business development.