Event
On the evening of October 30, the company released its third-quarter report for 2019. During the reporting period, the company realized parent profit of 422 million yuan, down 66.96% from the same period last year, and basic earnings per share of 0.15 yuan per share, down 66.96% from the same period last year. The company made a net profit of 42 million yuan in the third quarter, down 86.50% from the second quarter.
The sales price of finished products fell and the cost of raw materials rose. The company's performance declined significantly in the third quarter.
The company's main products are profiles, plates and strips, of which profiles account for more than 78%. Iron ore prices have remained high since the third quarter of this year. The forward spot price of 62 per cent of iron ore in Australia in the third quarter was $101.33 per dry tonne, up 1.5 per cent from the second quarter, according to steel federation. In the case of rising cost pressure, the price of rebar, the company's main product, is still in a downward trend in the third quarter: take rebar HRB400:20mm as an example, according to steel couplet data, the average price of rebar in Shenyang area in the third quarter was 3765 yuan / ton, a month-on-month decrease of 134yuan / ton, a drop of 3.44%. The rising cost of raw materials and the decline in sales prices of finished materials are the main reasons that affect the company's performance in the third quarter.
On the other hand, the company's production continued to increase slightly in the third quarter. According to the company's announcement, the company's output of profiles, plate and strip and pipe in the third quarter was 1.195 million tons, 303000 tons and 27000 tons respectively, a total of 1.525 million tons, an increase of 2.98 percent over the previous quarter.
The ownership structure has changed slightly compared with the semi-annual report.
After the initial increase and lifting of the ban, the ownership structure has changed greatly this year. As of the third quarterly report, Tianjin Taiyue and Jiujiang Pinggang are the second and third largest shareholders of the company, of which Tianjin Taiyue holds 553 million shares, accounting for 19.94% of the total share capital; Jiujiang Pinggang holds 311 million shares of the company's share capital, accounting for 11.23% of the total share capital. Compared with the semi-annual report, the company's ownership structure has changed slightly: the shares of Tianjin Taiyue and Jiujiang Pinggang remain unchanged in the second quarter, but Jiujiang Pinggang Iron and Steel Co., Ltd. is an industrial-controlled enterprise of Liaoning Fangda Group Industrial Co., Ltd. Fangwei added 7.548 million shares, accounting for 0.27%. In the later stage, the change of ownership structure and its impact on the company's operation still need to be paid more attention to.
Give a "hold" rating
Since the beginning of this year, the prices of raw materials such as iron ore have risen sharply, increasing the company's operating costs, while the decline in the sales price of Pu Steel has affected the company's product profits. Combined with the fact that the company's third-quarter results are lower than expected, we think the company's performance may be affected to a certain extent. Therefore, from 2019 to 2021, we adjusted the company's EPS from 0.28,0.29,0.32 yuan per share to 0.18,0.22,0.25yuan per share, and adjusted the company rating from "buy" to "hold".
Risk tips: demand side is not as expected, upstream raw material prices fluctuate sharply, and so on.
