Linggang achieved an income of 20.777 billion in 2018 and a net profit of 1.197 billion, the second consecutive year of high profit, but lost 80 million in the fourth quarter of 18 years. We expect the overall economic center of the iron and steel industry to move downward in 2019, which will put greater production and operation pressure on steel mills such as companies, which have about 20% of their products to be sold across regions to the south. However, the company is also expected to benefit from the relocation and conversion of Xuanshan Iron and Steel Group, a subsidiary of Hegang Group, to reduce an important competitor and from the fact that Xiongan New area enters a comprehensive construction phase that is expected to boost steel consumption in the region where the company is located.
With the help of the fixed growth in 2015 and the high industry boom in 17-18, the company's debt ratio fell from 78.45% in 14 years to 53.45% in 18 years, and interest-bearing liabilities and financial expenses also fell from 4.859 billion and 395 million in 15 years to 3.376 billion and 151 million in 18 years, respectively. At present, the company is a listed company with reasonable leverage and good business performance.
On February 26, Fangda transferred 6.23% of the company's shares by agreement, and now holds 6.5% of the company's shares is 4 shareholders, is a standard important financial investor. However, we note that the total shareholding of 2-4 shareholders is 34.94%, which exceeds 34.57% of the major shareholder Linggang Group, and Linggang Group is one of the four state-owned enterprises in Liaoning Province participating in the "double hundred Plan" of state-owned enterprise reform. and judging from Fangda Group's step-by-step acquisition of the actual control of Northeast Pharmaceutical, it is still possible for Fangda to further increase its shareholding ratio or even seek actual control in the future.
We estimate that from 2019 to 2021, the company is expected to achieve revenue of 18.466 billion, 17.912 billion and 18.002 billion, and return net profit of 634 million, 546 million and 596 million, corresponding to 0.23,0.20 and 0.22 yuan per share EPS, respectively. Give an overweight rating and be valued at 20 times 19-year earnings of PE, with a target price of 4.60 yuan per share
