20-year net profit increased by 185% compared with the same period last year, maintaining the "overweight" rating. On April 12, the company released its 20-year annual report, with revenue of 21.7 billion yuan (yoy+5.4%) and net profit of 320 million yuan (yoy+184.6%), which was basically consistent with the performance forecast (P. 2021-001). The revenue of 20Q4 is 6.1 billion yuan (yoy+18.2%, qoq+3.2%), and the net profit is 10 million yuan (19Q4 is-130 million yuan, qoq-94.1%). The month-on-month decline is more, or partly due to the influence of expenses, the R & D cost of 20Q4 amounts to 212 million yuan (20Q3 is 4 million yuan). In 21 years, the company will continue to carry out comprehensive benchmarking to find the difference, in addition, under the banner of Baowu, China, the company is currently carrying out the coordination of raw material procurement, which may bring room for further cost reduction and efficiency, and we are optimistic about the development of the company. We estimate that the company's EPS for 21-22 and 23-year EPS will be 0.35 and 0.37 yuan and 0.48 yuan respectively, maintaining the "overweight" rating.
In the past 20 years, steel output has increased by 8.3% compared with the same period last year, and the gross profit margin of building materials and plates has been improved year-on-year. The company's steel output in the past 20 years is 5.97 million tons (yoy+8.3%), of which building materials and plates are 242 and 3.43 million tons respectively (yoy+1.3%, + 9.5%). According to the company's business announcement (2021-004), the average price of building materials and plates in 2020 is 3347 yuan / ton (yoy-5.1%,-2.3%). We estimate that the gross profit per ton is 362,343 yuan / ton (yoy+47, + 41 yuan / ton), and the gross profit margin is 12.0% and 12.3% (yoy+1.7, + 1.5pct). The company has achieved a year-on-year improvement in gross profit margin and gross profit margin under the background of downward steel prices and upward mineral prices in the past 20 years, or mainly because the company has actively carried out bid finding, cost reduction and efficiency improvement, and the scale of production and marketing in 20 years has expanded or diluted part of the fixed cost.
The gross profit margin and net profit margin of sales in the past 20 years rose year on year.
20-year gross sales margin 10.5% (yoy+1.7pct), period expense rate 8.3% (yoy+0.3pct), of which R & D expenses change greatly (yoy+199%), mainly due to new R & D projects; 20-year net sales margin 1.5% (yoy+0.9pct). The gross profit margin of 20Q4 sales is 13.1% (yoy+6.7pct, qoq+0.9pct); the net profit margin of sales is 0.2% (yoy+2.7pct, qoq-3.8pct). The higher decline than the previous month is mainly due to the management and R & D fees used for centralized calculation of Q4, with an expense rate of 11.5% (qoq+4.1pct).
In addition, as the company's cumulative undistributed profits at the end of 20 years are still negative, there will be no dividends for 20 years.
Under the coordination of standard finding and procurement, we may continue to reduce costs and increase efficiency, and maintain the rating of "increasing holdings". According to the annual report in 20 years, the company will continue to carry out comprehensive benchmarking and finding differences in 21 years; and under the banner of Baowu, the company is currently carrying out coordination in the purchasing side of raw materials. it may be expected to bring room for further cost reduction and efficiency. In addition, according to China Baowu official website, the company's controlling shareholder, Baosteel, will be a platform for capacity integration in Xinjiang. If carried out smoothly, the supply and demand pattern in Xinjiang is expected to improve, and the company may benefit. Considering that both steel prices and mineral prices are rising under the economic recovery, we raise the relevant price assumptions, and it is estimated that the EPS for 21-22 years is 0.35max 0.37 yuan (the previous value is 0.11pm 0.12 yuan), and the EPS for 23 years is 0.48 yuan. The average value of PB (21E), BPS (Wind consensus expectation) of comparable company is 1.55times. Considering the space of reducing cost and increasing benefit, the company is given 1.7x PB (21E Wind 21E) is 3.29yuan, and the target price is 5.59yuan (previous value 3.92yuan), maintaining the "over-holding" rating.
Risk hint: macroeconomic growth is lower than expected; iron ore prices rose faster than expected.