The capacity utilization rate was briefly under pressure. We are optimistic that orders and production will grow steadily throughout the year 24H1. The cumulative number of new orders signed was about 14.356 billion yuan, -4.66% year over year, and 7.391 billion new orders signed in a single quarter in Q2, or -5.87% year on year. Steel structure production in the first half of '24 was about 2.1058 million tons, up 0.12% year on year; Q2 single quarter production was 1.1879 million tons, up 0.1% year on year from 23Q2. According to our estimates, the processing volume corresponding to the company's orders declined or fell slower than the actual order decline. As the issuance of local special bonds accelerates in the second half of the year, downstream demand may be expected to recover, and we are still optimistic about annual performance growth.
The price of a single ton was affected by the short-term decline in steel prices. The actual processing volume still increased 21Q2/22Q2/23Q2/24Q2. The number of manufacturing contracts exceeding 0.01 million tons carried out by the company in a single quarter was 6/13/14/16, and the number of large orders continued to grow. Among them, there were 9 large high-end manufacturing orders in the 24Q1 single quarter. The price of a single ton ordered by the 24Q2 company was 4,900 to 6200 yuan/ton, which is a certain decrease from the price range of 4830.5-7275.8 yuan/ton ordered by the 23Q2 company (the central price decreased by 8.13%). Steel prices fell 3.38% year on year in the 24Q2 single quarter. If the 23Q2 and 24Q2 steel prices are used as the basis and the processing fee of 1200 yuan/ton is added as the calculation standard, the processing volume corresponding to the new 24Q2 order is 1.474 million tons, a year-on-year decrease of 3.37%. Affected by downstream demand, we determine that the order volume may be under pressure.
Optimistic about the company's intelligent transformation and medium- to long-term growth potential, maintaining a “buy” rating of 24Q2, the company announced that the subsidiary received a total of 95.55 million yuan (before tax) in a single quarter, an increase of 39.44 million yuan over 23Q2, an increase of 142% over the previous year. The increase in government subsidies is expected to increase profits throughout the year. In '23, the company developed a “lightweight arc welding robot intelligent welding system”, which has the ability to integrate ground-rail intelligent welding workstations without teaching. At present, the company's top ten production bases have put into use a small number of Honglu lightweight intelligent welding robots and self-integrated ground-mounted teaching-free intelligent welding workstations. We are optimistic about the quality and efficiency improvements brought about by the company's intelligent transformation. At the same time, the company increased its dividend ratio for 23 years, from 15% to 30%. It is recommended to focus on the investment value of leading steel structure manufacturing companies. We determine that the company's total output is expected to reach 5.2 million tons for the whole year. The company's net profit for 24-26 is 1.3, 1.5, and 1.7 billion yuan, which corresponds to PE of 8, 7, and 6 times. If PE is given 13 times in 24 years, the corresponding target price is 24.7 yuan, maintaining a “buy” rating.
Risk warning: the impact of the continued rise in steel prices on profits exceeded expectations; the company's capacity utilization rate did not increase as fast as expected; and the new supply volume of the industry exceeded expectations.