20 years of net profit to achieve year-on-year growth, to maintain the "holding" rating on April 27, the company released 20-year annual report, 20 years to achieve revenue of 31.6 billion yuan (yoy+8%), return to the net profit of 1.86 billion yuan (yoy+2%), basically in line with our previous expectations (1.8 billion yuan); 20Q4 achieved revenue of 9.1 billion yuan (yoy+21%, qoq+14%), return to the net profit of 650 million yuan (yoy+22%, qoq+67%). In addition, the company plans to pay 0.2 yuan per share for 20 years, with a cash dividend rate of 26% and a dividend yield of 3.8% (4.27 closing price). The company's regional leading position remains unchanged, and is actively carrying out tapping potential to reduce costs, optimistic about the development of the company. We estimate that the company's EPS for 21-23 will be 1.13 yuan for 0.98 won 1.03 won, maintaining the "overweight" rating.
Over the past 20 years, the cost of the project has been reduced by 2.828 billion yuan, and the gross profit margin of steel has been unchanged over the same period last year. The company's output of iron, steel and materials in the past 20 years is 652,802 and 7.68 million tons respectively (yoy+2%, + 8% and + 9%), and the sales of commodity billets are 8.04 million tons (yoy+13%). It is estimated that the average steel price is 3485 yuan / ton (yoy-4.1%), the gross profit per ton is 470 yuan / ton (yoy-22 yuan / ton), and the gross profit margin is 13.5% (basically the same as the same period last year). In the past 20 years, the company has made every effort to find the difference and tap the potential. in the whole year, the project cost has been reduced by 2.828 billion yuan, and the benefit In addition, according to the announcement (2021-25), the company plans to invest 49 million yuan to set up a joint venture with Baowuqingneng Guangdong Baohydrogen Technology Co., Ltd. (49%) to promote the layout of new energy and hydrogen energy industry in Guangdong.
20Q4 sales net profit margin and operating cash flow are significantly improved compared with the previous year. In 20 years, the company's sales gross profit margin is 12.2% (basically the same as the same period last year), and the period expense rate is 4.8% (yoy-0.8pct). In terms of items, sales expenses decreased by 44% year-on-year due to partial freight costs, while management expenses rose 39% year-on-year due to higher salary. The net profit rate on sales was 5.9% (yoy-0.4pct), which was partly due to the increase in income tax rate compared with the same period last year. 20Q4, gross sales margin 14.3% (yoy-5.1pct, qoq+2.1pct), period expense rate 5.5% (yoy-2.2pct, qoq+0.2pct), net sales margin 7.2% (basically flat year-on-year, qoq+2.3pct). In terms of cash flow, the net operating cash flow of 20 years is 3.06 billion yuan (yoy+48%), and the 20Q4 is 1.48 billion yuan (yoy+553%, qoq+335%).
The regional advantage is obvious, and the rating of "increasing holdings" is maintained.
The company's regional leader remains unchanged, and it is close to Hong Kong and facing the sea, which enjoys a certain cost advantage compared with inland steel enterprises; in addition, according to the company's annual report, the company will continue to tap the potential to reduce costs in 21 years. Plan to sell 9.54 million tons of commodity billets in 21 years (sales volume of "base management, brand operation"). Considering that both steel prices and mineral prices are rising under the economic recovery, we adjust the relevant price assumptions and estimate that the EPS for 21-23 years will be 0.98 pound 1.13 yuan (the previous value is 0.85 pound-0.98 pound-yuan). The average value of PB (21E), BPS (Wind consensus expectation) of comparable company is 1.20times. Considering the regional advantages of the company, the company is given 1.25x PB (2021E and 2021E) of 4.71yuan, and the target price is 5.89yuan (the previous value is 4.68yuan), maintaining the "overweight" rating.
Risk hint: macroeconomic growth is lower than expected; iron ore prices rose faster than expected.