Net profit attributable to mother for the first quarter was +34.29% year-on-year, maintaining 24Q1 revenue of “holding” rating companies of 281 million yuan (yoy +6.64%, qoq -25.23%), and net profit to mother of 122 million yuan (yoy +34.29%, qoq -62.26%). We maintain our profit forecast. We expect the company's EPS to be 0.37/0.38/0.39 yuan for 24-26, respectively. Comparable companies had an average PE (2024E) value of 16.9X, giving the company 16.9 times PE valuation in 24 years, corresponding to a target price of 6.25 yuan (previous value of 5.33 yuan), maintaining a “holding” rating.
The price of 24Q1 iron powder rose first and then fell. The company's gross margin was -5.06pct month-on-month. According to the company's quarterly report, the 24Q1 company's gross sales margin was 17.02% (yoy-2.93pct, qoq-5.06pct). Among them, 24Q1 iron ore prices rose and then fell, and the average price of 24Q1 iron ore futures was about 908 yuan/ton (yoy +3.5%, qoq -2.3%), mainly due to the relatively good demand before the Spring Festival, compounded by the demand for replenishment of steel mills to support the high level of iron ore prices. Demand recovered slowly after the Spring Festival, and iron ore prices fell under pressure. In addition, the 24Q1 company had an expense ratio of 8.65% (yoy-3.91pct, qoq-0.94pct), of which the management fee ratio was 11.12% (yoy-3.61pct, qoq+0.53pct), and the financial expense ratio was -4.03% (yoy-0.61pct, qoq-1.37pct). 24Q1 Company's net sales margin was 8.18% (yoy+1.79pct, qoq-7.65pct).
Steel demand recovered, supporting a rebound in iron ore prices
According to Mysteel's steel production and inventory data, steel consumption has recovered. As of 4.19, the weekly apparent consumption of rebar has recovered to 2,815,800 tons, and the year-on-year decline narrowed to -12%, a sharp improvement of about 40% compared to 2.12 million tons in early March; in addition, demand for plates and strips maintained good performance, and the apparent consumption of the five major steels fell by only about 4% year on year. As demand recovered and steel mills actively cut production in the early stages, pressure on steel inventories eased, industry fundamentals improved, and there was room for recovery in steel mill production, supporting iron ore prices to stop falling and rebounding.
Risk warning: downstream demand falls short of expectations, and raw material prices fluctuate.