Brief comment on performance
The company released its quarterly report for 2020, with revenue of 5.91 billion yuan during the reporting period, down 9.36% from the same period last year, and net profit belonging to shareholders of listed companies was 142 million yuan, down 67.33% from the same period last year.
Business analysis
Under the influence of the epidemic, the volume and price of iron and steel products fell. According to the company's first-quarter operating data, affected by the delay in the resumption of production downstream caused by the epidemic, the company's hot coil product Q1 production and sales volume were 1.0506 million tons and 1.0847 million tons respectively, down 11.15% and 9.85% respectively compared with the same period last year. At the same time, the postponement of demand led to a drop in steel prices, and hot coil sales prices fell 2.6% compared with the same period last year.
Pay attention to the progress of cooperation with Tmall. In the previous change announcement, the company prompted that it signed a cooperation framework agreement with Zhejiang Tmall on the joint construction of Zhejiang Cloud Computing data Center project in Hangzhou, and the proposed site of the Hangang Banshan base land, investment scale and amount, specific partners, process arrangements, distribution plan, exit mechanism and other specific matters have not yet been determined. The above means that the company's IDC business market development is progressing smoothly, and the steel mill IDC model has been further verified.
The first phase of the company's IDC is expected to be launched in 20H1. At present, the company's cloud computing data center has a total of 9670 cabinets, and it is expected that 4000 cabinets in the first phase will be completed and put into operation by the second half of this year and generate profits. We believe that the company has obvious competitive advantages in participating in IDC: 1) the advantage of land location and land reserve. Hangzhou is short of land resources. after the Banshan base is closed, the group's own land covers an area of 1743 mu, and a long-span idle plant with a reserve of 400000 square meters can be used for transformation. 2) the advantage of energy supply. There are already substations that can provide independent power for the data center, as well as a natural gas master station. 3) Policy and customer advantage. As a state-owned enterprise, the company has obvious advantages in the construction of "government cloud". At the same time, Hangzhou area has a large number of potential users, such as BABA, and the demand for IDC is large, so the future development is worth looking forward to.
Profit Forecast & Investment suggestion
The original profit forecast did not take into account the IDC part, but is currently considering the delivery of the first phase of the cabinet in the second half of the year, which is expected to generate less profit this year. The main profit of IDC is expected to be reflected in 21 and 22 years, with an estimated number of cabinets of 4000, 9600 and 15000 respectively. Based on the above adjustment of the profit forecast for next year and the year after next, the main increment comes from the IDC part. The company is expected to achieve a net profit of 928 million yuan, 1.04 billion yuan and 1.142 billion yuan in 20-22 years, an increase of 1.11%, 12.06% and 9.80% over the same period last year, and the corresponding PE is 27.4,24.4 and 22.2 times, respectively. Maintain a "buy" rating.
Risk hint
The progress of the additional offering is lower than expected, and the profitability of the iron and steel business is not up to expectations, which is a drag on short-term performance.