Core views
The company released production capacity in 2023, and production increased significantly. At the end of 2023, the company's bond-conversion and fund-raising project was successfully put into operation. The carry-over from previous years and the release of new production capacity are expected to bring about a significant increase in seamless tube sales this year.
Nickel prices and stainless steel prices declined markedly throughout 2023, but the company's seamless tube sales price bucked the trend, which shows that the degree of high-end products has increased dramatically, raising the average price.
The company's dividend payment rates for 2020-2022 were 49%, 61%, and 71%, respectively, and the dividend payment ratio has been in a high position for a long time. The company's debt conversion and fund-raising project has been successfully put into operation. The pressure on capital expenditure in the later stages is low, and it is expected to maintain high dividends. Based on the 50%, 60%, and 70% scenarios, the corresponding dividend rates are 4.5%, 5.4%, and 6.3%, respectively.
The dividend rate is attractive.
occurrences
The company announced its 2023 annual results forecast.
The net profit for the full year is estimated to be about 353 million yuan, an increase of about 64.13% over the previous year. The fourth quarter is expected to achieve net profit of about 80 million yuan in a single quarter, down about 10% from the previous quarter.
Brief review
Production and sales data have increased, and production capacity has been released.
The company produced 56,000 tons of seamless pipes (+90,000 tons year on year) and 35,000 tons of welded pipes (+0.56 million tons year on year) in 2023. Production capacity was released, and production increased significantly. The company sells 510,000 tons of seamless pipes (+50,000 tons year on year) and 35,000 tons of welded pipes (+0.6 million tons year on year) throughout the year. The production and sales rate of seamless pipes is 91%, and the production and sales rate of welded pipes is 99.7%.
The production and sales rate of seamless pipes is low, and there may be a problem with a certain settlement cycle. At the end of 2023, the company's bond-conversion and fund-raising project was successfully put into operation. The carry-over from previous years and the release of new production capacity are expected to bring about a significant increase in seamless tube sales this year.
Average sales prices have risen, and high-end development has become prominent.
The company's average sales price of seamless pipes in 2023 was 46,000 yuan (+12% year over year), and the average sales price of welded pipes was 27,000 yuan (-3% year over year). Nickel prices and stainless steel prices declined markedly throughout 2023, but the company's seamless tube sales price bucked the trend, which shows that the degree of high-end products has increased dramatically, raising the average price. During the reporting period, the company successfully supplied tubes for ethylene cracking furnaces and signed a supplier agreement with Saudi Aramco, which is expected to begin supply this year. High-end products continue to gain strength, and sales prices are expected to continue to rise.
Historical dividends are high, and dividend rates are attractive.
The company's dividend payout ratios for 2020-2022 were 49%, 61%, and 71%, respectively, and the share payout ratio has been in a high position for a long time. The company's debt conversion and fund-raising project has been successfully put into operation. The pressure on capital expenditure in the later stages is low, and it is expected to maintain high dividends. Based on the 50%, 60%, and 70% scenarios, the corresponding dividend rates are 4.5%, 5.4%, and 6.3%, respectively. The dividend rate is attractive.
Profit forecast and investment advice: The company's early price lock order for boiler tubes has been executed, and the price of new orders is expected to rise. In addition, ethylene cracking tubes are expected to be released this year. After obtaining Saudi Aramco's supplier qualification, the company will also participate in Saudi Aramco's tender and is expected to obtain orders. The above factors will all contribute positively to the company's sales volume and product price. At the same time, the 20,000 ton seamless pipe project to be invested in bonds will provide sufficient production capacity, and there is plenty of room for growth in the company's performance.
The company's net profit for 2023-2025 is estimated to be 350 million, 500 million, and 650 million, respectively. The corresponding PE is 10.7, 7.5, and 5.8 times, respectively, maintaining a “buy” rating.
Risk analysis: The company's main business is R&D, production and sales of stainless steel pipes, involving domestic and foreign markets. Key engineering fields such as downstream power plant boilers, petrochemicals, nuclear power plants, papermaking, medical devices, and marine vessels are all linked to the macroeconomy to a certain extent and are affected by macroeconomic fluctuations.
Although the company's products have certain technical barriers and the overall application situation is improving, if the global macroeconomic economy continues to decline, it may cause the company to reduce domestic and foreign orders and slow repayment speed, which will have a direct impact on the company's production and operation. The main raw materials of the company's products are stainless steel round steel and stainless steel sheets. Fluctuations in raw material prices directly affect the cost of the company's products, which in turn affects the company's gross profit and net profit level.