This report is read as follows:
The company's performance in the first three quarters of 2020 was slightly lower than expected, and the company's gross profit per ton of steel and net profit declined compared with the previous quarter. As the gap between supply and demand of iron ore is gradually made up in 2021, the high price of iron ore falls, and the company's performance is expected to pick up gradually.
Main points of investment:
Maintain the "overweight" rating. In the first three quarters of 2020, the company achieved revenue of 37.167 billion yuan, up 5.82% from the same period last year, and realized a net profit of 1.236 billion yuan, down 16.72% from the same period last year. The company Q3 achieved revenue of 14.163 billion yuan in a single quarter, up 15.68% from the same period last year, and realized a net profit of 463 million yuan, up 111.87% from the same period last year. The company's performance was slightly lower than expected. Considering that the iron ore price remains high during the year, and the ore price is expected to fall slowly in 21 years, the company's EPS in 2020-2021 will be reduced to 0.69 prime 0.71 (the original 0.75 scarp 0.80 yuan), and the new EPS in 2022 will be 0.73 yuan. Taking into account the obvious geographical advantages of the company, give the company 8 times valuation in 2021, raise the company's target price to 5.68 yuan, "increase" rating.
Production and marketing are stable, and costs are a drag on performance. The steel sales volume of the company in the first three quarters of 2020 was 178,236 and 2.47 million tons respectively, which was basically stable, the price per ton of steel was 5992 yuan, 5218 yuan and 5746 yuan per ton respectively, and the cost per ton of steel was 5623 yuan, 4749 yuan and 5342 yuan per ton respectively. The gross profit per ton of steel was 369,469,404 yuan per ton respectively, and the net profit per ton of steel was 92,257,188 yuan per ton respectively. We expect iron ore prices to fall as the gap between supply and demand narrows in 21 years, and the company's performance is expected to pick up.
The asset-liability ratio remains low and the cost per ton of steel continues to decline. At the end of the third quarter of 2020, the company's asset-liability ratio was 58.49%, down 4.05 percentage points from the same period last year and remained low as a whole. The company's three fees per ton of steel in the first three quarters of 2020 were 257,207,199 yuan per ton respectively, and the company's cost per ton of steel decreased quarter by quarter.
Iron and steel demand steadily superimposed mineral prices fell, the company's 21-year performance is expected to pick up. From a macro point of view, short-term mainland production toughness, steel demand will not drop significantly. The company is the leading steel enterprise in Guangxi Province, the demand for steel in the province is strong, the company will fully benefit from the strong demand. As the gap between supply and demand of iron ore is gradually made up in 2021, the company's performance is expected to pick up gradually under the background of high ore prices.
Risk hint: macroeconomic decline accelerated; supply-side rise exceeded expectations.