Main points of investment
The company announced its mid-2017 report: the company achieved revenue of 2.642 billion yuan in the first half of this year, down 26.03% from the same period last year, and achieved a net profit of 10.8556 million yuan, reversing losses compared with the same period last year.
The prosperity of the industry has rebounded, and the volume and price of iron and steel business have risen, which is the main force of performance turnaround. In the first half of this year, although steel prices fluctuated, the overall operation was in a high range. The company achieved steel output of 601100 tons, an increase of 11.58% over the same period last year. In addition, the company's iron concentrate production increased by 44.87% and coke output increased by 0.71% in the first half of the year compared with the same period last year. However, due to the impact of the construction cycle, the sales volume of Xigang Real Estate Company decreased, the company's housing sales area decreased by 99.48% in the first half of the year compared with the same period last year, and Tengbo Trading Company's sales also declined, resulting in a 26% decline in revenue in the first half of the year. Taking a comprehensive view of the four major sectors of iron and steel manufacturing, coal coking, iron polymetals and real estate development, the gross profit margin of comprehensive sales reached 23.87%, which was significantly higher than that of the same period last year. The increase in profits of the steel manufacturing sector brought about by the recovery of the steel market is the main force for the company to reverse losses in the first half of the year.
The financial burden is a drag on second-quarter results. From a quarterly point of view, the company achieved a performance of 10.8282 million yuan in Q1 and only 27400 yuan in Q2 this year, which decreased significantly compared with the previous quarter. The gross profit margin of Q2 sales of the company is 23.54%, which is less than 1% lower than that of Q1. The month-on-month decline in performance is mainly due to the drag of financial expenses. The financial cost of Q2 is as high as 189 million yuan, an increase of 48.29 million yuan compared with Q1.
The restructuring of the business department adds vitality. The operation mechanism of the company's business department has been implemented since the beginning of this year, realizing the transformation from manufacturing unit to operating unit, and at the same time fully docking the manufacturing market to inject vitality into the future development.
It is estimated that the return net profit of the company from 2017 to 2019 is 87 million yuan, 159 million yuan and 203 million yuan, and the EPS is 0.08,0.15 and 0.19 yuan, corresponding to the current PE of 90.4,49.2 and 38.6 times, respectively.
Risk hint: the downstream demand of special steel is lower than expected; the debt burden is heavy; the income of real estate development fluctuates.
