Shareholders have advantages, steel, cement refractory business growth is worth looking forward to, given the "increase" rating company is the domestic glass / cement refractory products leader, steel refractory 19 years income industry top five. The actual controller of the company is China Building Materials. Recently, the company announced that it intends to reorganize its assets. Baowu Group intends to become the company's controlling shareholder, and China Building Materials is expected to be the second shareholder. The company has great room for improvement in the supply share of steel and cement resistant materials within Baowu Group and China Building Materials. In addition, the penetration of the whole package of the refractory industry continues to increase, the policy to promote industry reform is expected to increase, and the share of Longtou City will increase or accelerate. Excluding asset restructuring for the time being, we expect the company's 20-22-year EPS to be 0.12,0.22,0.36 yuan respectively, and its parent net profit Cagr 47.8%. Its growth is better than that of comparable companies (Cagr average 23.3%). It is given a 21-year 1.0xPEG (comparable company average value of 0.4 yuan) and a target price of 10.52 yuan.

The controlling shareholder will be changed to Baowu Group, and the development of steel refractory business is expected to speed up in August of 20 years. The company will issue asset restructuring and supporting fund-raising plans. If the plan is successfully implemented, the controlling shareholder of the company will be changed from China Building Materials Scientific Research Institute to Baowu Group. The demand for steel refractory products within Baowu Group is huge, and it is expected that Baowu Group will continue to promote merger and reorganization, which is expected to lead to a continuous increase in crude steel production, with a demand scale of more than 6 billion in 20 years (considering Wuhan Refractory, the company supplied 2.42 billion of Baowu Group's steel refractory products in 19 years). Following the integration of Baowu's internal steel business, the company has a large improvement space in its internal refractory products share, while relying on the background of central enterprises for external integration is also worth looking forward to, the company's steel refractory business development is expected to speed up. The previous verified Ruitai acquisition model of Xiangtan Iron and Steel Company and the new construction model of Ruitai Maanshan Iron and Steel Co., Ltd., can be used for reference.

After the reorganization, China Building Materials is expected to be the second shareholder of the company, and the cement refractory company still has room for growth. The company is the leader of domestic cement kiln refractory products, with an estimated domestic market share of about 14.5% in 19 years. At the present stage, the actual controller of the company is China Building Materials, and it is expected to remain the second shareholder of the company after the transfer of the controlling stake. China Building Materials is in the vanguard of the supply-side reform of the domestic cement industry, with cement clinker sales of 390 million tons in 19 years, an increase of more than 30 times over 2006, and estimated to have a market share of more than 15% in the country. In 1919, the expenditure on building materials refractory products was about 1.17 billion, of which the company supplied no more than 30% (the company earned 1.01 billion of cement kiln refractory products in 19 years).

There is room for improvement in the future. With the deep integration of cement assets within China Building Materials and the continued integration of external cement production is expected to continue to increase, the company's cement kiln refractory products business still has a lot of room for growth.

The reform of the refractory industry, the rising pace of the leading market share of the industry is expected to speed up the reform of the refractory industry is reflected in: 1) the acceptance of the overall contracting mode is relatively high, which is the trend of the industry, and there is still much room for improvement in permeability. 2) the pace of increase in industry concentration in the early stage is lower than expected by the policy (in 19, CR10 is expected to be no more than 17% of the CR10 market share in 20 years), and the subsequent supply-side reform is expected to increase; 3) the sharp fluctuations in the price of refractory raw materials around 17 years have damaged the performance ability of some small and medium-sized enterprises, and customers have accelerated to move closer to the industry leader. The company as a domestic glass, cement refractory leader, steel refractory domestic top five, benefit from industry change, the company's market share to increase the pace or speed up.

Risk tips: the prosperity of the iron and steel industry is declining, the price of raw materials fluctuates sharply, the risk of failure of asset restructuring and change of controlling shareholders.