Main points of investment
Performance summary: the company released its annual report for 2019. During the reporting period, the company realized operating income of 23.478 billion yuan, an increase of 3.7% over the same period last year, and realized net profit of 926 million yuan for shareholders of listed companies, down 48% from the same period last year.
22%, equivalent to 0.1yuan in EPS, and 727 million yuan in non-net profit, down 56.69% from the same period last year. As of the end of 2019, the undistributed profit is-9.364 billion yuan. The company will not distribute profits or increase capital reserves in 2019.
Operating data: in 2019, the company achieved iron, steel and material output of 6.1103 million tons, 6.7236 million tons and 6.4274 million tons respectively, an increase of 7.62%, 5.36% and 5.18% respectively over the same period last year, all exceeding the annual planned target and setting the best level in history. capacity utilization further climbed to 80%; steel sales reached 6.5074 million tons, an increase of 7.62% over the same period last year, and the production and sales rate was 101%. Combined with the annual report data, the price per ton of steel in 2019 is 3591 yuan, the cost per ton of steel is 3327 yuan and the gross profit per ton of steel is 265 yuan, which is-143,77 and-220yuan respectively compared with the same period last year. In addition, the company plans to produce 6.12 million tons of iron, 6.8 million tons of steel and 6.38 million tons of steel in 2020, achieving steel sales of 6.38 million tons.
Financial analysis: in 2019, the company's operating income increased by 3.7% compared with the same period last year, of which the operating income of the main steel industry increased by 3.5% compared with the same period last year, mainly due to the meek blast furnace production and sales reaching an all-time high, completely hedging the impact of falling sales prices. In 2019, the comprehensive gross profit margin was 7.49%, down 5.57PCT from the same period last year, mainly due to the increase in the price of raw materials such as iron ore. The average purchasing price of the company in 2019 was 779 yuan / ton, an increase of 156 yuan / ton.
The expense rate during the period was 3.8%, which decreased by 0.9PCT compared with the same period last year, of which the management cost was reduced by 24.87% due to the reduction of incentive funds and dismissal benefits in the current period, and the cost per ton of steel was reduced by 40 yuan to 137 yuan during the period. The net profit margin was 3.9%, down 4.0PCT from the same period last year, and the net profit per ton of steel decreased by 153 yuan to 142 yuan compared with the same period last year. In addition, the non-recurrent profit and loss items in 2019 are mainly 145 million yuan of government subsidies included in the profits and losses of the current period.
During the downward period of the industry, efforts were made to repair internal skills: although steel demand grew by about 8% in 2019, driven by strong real estate investment, supply grew even more than demand due to factors such as the relaxation of blast furnace production restrictions and the expansion of technological capacity. The bargaining power of the industry is under pressure, gross profit per ton of steel has fallen, and the performance of listed companies has generally dropped sharply compared with the same period last year. The decline of the company's performance is in line with the industry trend, and the degree of decline is slightly better than the average decline, mainly due to the company's efforts to practice internal skills after judicial restructuring, procurement, production, management and other omni-directional breakthroughs. On the one hand, the company rationally adjusted the structure of resource distribution. In 2019, the company deepened cooperation with the four major mines and obtained 4.95 million tons of Changxie Mine, an increase of 3.95 million tons over the same period last year. At the same time, 11 domestic direct suppliers of high-quality coal were introduced, and the direct mining ratio increased by 22 percentage points to 85% over the same period last year. On the other hand, the company will shift more production and sales to Sichuan and Chongqing, and continue to promote direct supply, direct sales and direct hair work to enhance regional market dominance. In addition, through the long-term optimization of the main technical indicators, the blast furnace utilization coefficient and fuel ratio in the reporting period reached the best level in history, while the iron-steel rolling interface was perfectly connected, and the yield of bar and wire rod reached the best level in history.
Investment suggestion: as a leading steel enterprise in Sichuan and Chongqing, after judicial reorganization, the company advances in stages according to the venation of "hemostasis, hematopoiesis and upgrading", and qualitative changes have taken place from development strategy to production and operation to financial indicators. However, considering that the industry boom is in the downward stage and the company's endogenous marginal improvement space may be partially hedged, we expect the company's EPS to be 0.06,0.07 and 0.09 yuan in 2020-2022, maintaining a "hold" rating.
Risk hints: the sharp decline in the macro-economy has led to pressure on demand; supply-side pressure continues to increase.