The net profit of the first three quarters was-11.4% compared with the same period last year, while the revenue of the "overweight" rating company in the first three quarters was 1.079 billion yuan (yoy-4.4%), and the net profit of 23Q3 was 177 million yuan (yoy-11.4%). The net profit of 23Q3 was 70 million yuan (yoy+92.4%, qoq-22.0%).
Considering that the implementation of the policy of flat control of crude steel production is weak and the iron ore demand is still resilient, we raise the iron ore price assumption and estimate that the company's EPS for 23-25 years will be 0.48 soybean 0.49max 0.50 yuan (previous value 0.32 pound 0.34 pound 0.37 yuan). The average PE (2023E) of the comparable company is 15.0X, which gives the company a valuation of 15.0 times PE for 23 years, corresponding to the target price of 7.20 yuan (the previous value is 8.05 yuan), maintaining the "overweight" rating.
The price of 23Q3 iron concentrate powder is on the strong side, and the company's gross profit margin is + 3.57pct. According to the company's three-quarter report, 23Q3's sales gross profit margin is 24.68% (yoy+10.24pct, qoq+3.57pct), of which the price of 23Q3 iron concentrate powder is strong, and the average 23Q3 price is 970 yuan / ton (yoy+16.0%,qoq+7.4%), mainly due to the high domestic crude steel production and the limited supplement of scrap resources, pig iron production remains high to support iron ore demand. In addition, the cost rate of 23Q3 during the period is 8.21% (yoy-5.97pct, qoq+3.44pct), of which the rate of management expenses is 7.76% (yoy-6.59pct, qoq+1.44pct) and the rate of R & D expenses is 2.63% (yoy+0.03pct, qoq+1.58pct). 23Q3's net profit rate on sales is 17.36% (yoy+5.32pct,qoq-5.48pct).
Iron ore demand is still resilient, iron ore prices may remain high
According to the Mysteel,1-September domestic cumulative crude steel output of 802 million tons, + 5.77% year-on-year, steel exports increased significantly, superimposed domestic demand consumption resilience, supporting iron and steel production to remain high. Scrap replenishment is relatively limited, resulting in 247 steel mills daily hot metal output since July to maintain more than 2.4 million tons, iron ore demand toughness. Looking ahead to 23Q4, the current steel demand is still relatively stable, although steel mill profits are under short-term pressure and non-construction steel is burdened, but it has not yet triggered large-scale production cuts in steel mills, and we expect iron ore prices to remain high before hot metal production falls significantly.
Risk hint: downstream demand is lower than expected and industry policy has changed.