Net profit of 23Q1 was +124.8% year on year, maintaining the “increase in holdings” rating. On April 24, Wujin Stainless released its quarterly report. 23Q1 achieved revenue of 8.7 billion yuan (yoy +53.1%, qoq +9.6%), and Guimo's net profit was 73 million yuan (yoy +124.8%, qoq +0.9%). Considering the positive performance of the company in all downstream sectors, we expect the company's EPS to be 0.95/1.41/1.69 yuan in 23-25 (previous value of 0.86/1.13/1.38 yuan). Comparable companies have an average PE (2023E) value of 12.0 X. Considering the company's leading position in industrial stainless steel pipes, the company was given 14.0 times the PE valuation in 23 years, with a corresponding target price of 13.30 yuan (previous value of 12.90 yuan), maintaining the “increase in holdings” rating.
23Q1 seamless pipe and welded pipe production +31% year on year, gross margin +3.0pct YoY According to the company's quarterly report and operating data announcement, 23Q1's seamless pipe production was 12,200 tons (yoy +22%, qoq -5%), sales volume 12,000 tons (yoy +15%, qoq -0%), with an average sales price of 43,900 yuan/ton (yoy +16%, qoq +3%); welded pipe production 0.84 million tons (yoy +44%, qoq -6%), sales volume (yoy +0.95 tons) Y +69%, qoq +5% ), with an average price of 26,600 yuan/ton (YOY -1%, QOQ -3%).
The company's 23Q1 comprehensive gross margin was 14.30% (yoy+3.0pct, qoq-1.8pct). We estimated that the gross profit per ton was about 5,740 yuan/ton (yoy+1757 yuan/ton, qoq-284 yuan/ton), which declined slightly from month to month, or mainly due to the influence of the Spring Festival in the first quarter, which was a good year-on-year performance.
Net sales interest rate improved markedly year-on-year, after deducting net profit of +590% of the company's 23Q1 expenses ratio 4.8% (yoy-2.3pct, qoq-0.9pct), of which the sales expenses ratio was 1.2% (yoy-0.3pct, qoq-0.6pct), management expenses rate 3.4% (yoy-1.5pct, qoq-1.1pct), R&D expenses rate 0.9% (yoy-0.5pct, qoq-0.1pct), financial expenses ratio 0.2% (yoy-0.5pct, qoq-0.1pct), financial expenses ratio 0.2% (yoy-0.5pct, qoq-0.1pct) qoq+0.7 pct). Net profit margin on sales was 8.4% (yoy+2.7pct, qoq-0.7 pct). After deducting the net profit of non-return to the mother, 67 million yuan (YOY +589.7%).
The pace of downstream recovery is accelerating, and it is expected to maintain a high level of prosperity
According to the company's annual report for 22 years, the petrochemical industry accounted for 45.2% of the company's revenue, the natural gas industry accounted for 3.2%, the power equipment manufacturing industry accounted for 11.0%, the mechanical equipment manufacturing industry accounted for 19.7%, and other industries accounted for 21.0%. According to the company's investor relations activity record table, several major downstream companies of the company are recovering at an accelerated pace. Among them, investment in the chemical sector continues to increase, and the company's product structure has clearly been adjusted to high-end and customized products; the thermal power sector has clearly changed from its slump in previous years and has entered a boom cycle; at the same time, foreign trade work continues to develop, and foreign trade orders are constantly recovering.
Risk warning: downstream demand falls short of expectations, production expansion progress falls short of expectations, and raw material prices fluctuate.