The company released its 2023 annual report and 2024 quarterly report, and the performance growth was in line with expectations.
In 2023, the company achieved revenue of 344.50 billion yuan, -6.33% year over year, and achieved net profit of 11.944 billion yuan, or -1.99%; of these, Q4 achieved revenue of 89.484 billion yuan, +5.08% month-on-month, and -0.05% year-on-year, achieving net profit to mother of 3,594 billion yuan, -5.37% month-on-month and +31.99% year-on-year. The 24Q1 company achieved revenue of 80.814 billion yuan, -9.69% month-on-month, +2.81% year-on-year, and realized net profit to mother of 1.926 billion yuan, -46.41% month-on-month and +4.39% year-on-year.
Business performance bucked the trend, and product differences continued to strengthen. Against the backdrop of the downturn in the steel market, the company's export orders reached a record high in 2023, achieving a total profit of 15.09 billion yuan. The operating performance remained the first in the domestic industry, and the increase in business performance outperformed the industry market by 12.8%. In 2023, sales of “1+1+N” products were achieved, up 10% from the previous year. Cold-rolled automobile sheets were awarded the 7th batch of individual champion products in the manufacturing industry by the Ministry of Industry and Information Technology, and a full line of high-grade unoriented silicon steel specialized production lines for the NEV industry was put into operation.
The results of reducing costs and increasing efficiency are remarkable, and the resilience of Pugang's leading management is outstanding. In 2023, the company achieved steel sales of 51.9 million tons, a year-on-year increase of 4.3%; the price of a ton of steel was about 5240 yuan/ton, a year-on-year decrease of 9.83%; the cost of a ton of steel was about 5034 yuan/ton, a year-on-year decrease of 10.26%; and gross profit of a ton of steel was about 206 yuan/ton, an increase of 2.34% year on year. Cost reductions of 2.24 billion yuan were achieved in Q1 2024, which strongly supported the company's operating performance to outperform the industry market.
Promote actions to “improve quality, increase efficiency, and focus on returns” to protect the rights and interests of all shareholders. 1) Adhere to a high percentage of cash dividends. In 2024, the company plans to distribute a cash dividend of 0.20 yuan/share for the second half of 2023, with an estimated total dividend of 6.781 billion yuan, accounting for 56.77% of the net profit attributable to the parent company's shareholders in the consolidated statement; 2) Increase the frequency of dividends and use the two-year profit distribution plan as a long-term dividend policy; 3) Timely dynamic repurchases. By the end of March 2024, the company had already repurchased 342 million shares through centralized bidding transactions, and the total amount paid was 20.89 million yuan In the future, the company will continue to promote share repurchase plans, enhance investor confidence, and maintain the company's investment value.
Strive to achieve “No. 1 in business performance in the country” in 2024. Specific goals include:
“1+1+N” products sold 30 million tons, the export sales ratio was more than 10%, the cost was reduced by more than 3 billion yuan month-on-month, the technology saved 300,000 tons of standard coal, and “scenario+AI” was applied to at least 100, and major projects achieved node goals. In 2024, the company plans to produce 49.06 million tons of iron, 51.5 million tons of steel, and sell 52.22 million tons of commercial billets, with total operating revenue of 33.2 billion yuan and operating costs of 303.4 billion yuan.
Profit forecasting and valuation. We expect the company's 2024-2026 EPS to be 0.61, 0.66, and 0.70 yuan respectively. Considering the leading position of Baosteel Co., Ltd., based on the 2024 EPS and reference to comparable company valuations, we gave the 2024 14 times PE valuation unchanged, corresponding to a reasonable value of 8.54 yuan, maintaining the “superior to the market” rating.
Risk warning. The risk of significant fluctuations in raw materials. Downstream demand falls short of expectations. The risk that the crude steel production limit policy exceeds expectations.