Core ideas:
Performance in 2020: billet sales increased by 12.5% compared with the same period last year, contributing to an 8.3% year-on-year increase in operating income and a year-on-year net profit of 2.1%. According to the 2020 annual report, the company achieved revenue of 31.56 billion yuan in 2020, an increase of 8.3% over the same period last year, a net profit of 1.86 billion yuan, an increase of 2.1% over the same period last year, and a deduction of 1.86 billion yuan for non-net profit, an increase of 11.1% over the same period last year, and earnings per share of 0.77 yuan per share diluted by, ROE () was 19.6%.
The company intends to pay a cash dividend of 2 yuan (including tax) to all shareholders for every 10 shares. (1) Business split:
The proportion of steel revenue and gross profit is 88.8% and 98.3% respectively, of which the proportion of long wood revenue and gross profit is 64.3% and 79.6% respectively. (2) profitability: the gross profit per ton of steel decreased less than the industry average, and the cost per ton of steel decreased by 17.1% compared with the same period last year. (3) Operation quality: the ability to obtain cash is relatively stable, the ability to operate has been improved, and the ability to repay debt has increased significantly.
2021Q1 performance: operating income and return net profit increased by 24.2% and 11.9% respectively compared with the same period last year, and the ability to control fees was improved. According to the first quarterly report of 2021, the gross profit margin and net profit margin of 2021Q1 have declined compared with the previous month, and the profitability has weakened. The decline in the rate of 2021Q1 R & D expenditure led to a drop in costs to 3.6 per cent over the same period compared with the same period. Cash ability, operating capacity and debt-paying ability are all improved compared with the same period last year, and the quality of month-on-month operation is relatively stable.
Plan for 2021: crude steel output will be reduced by 4.0%, sales of commodity billets (including "base management, brand operation") will increase by 18.7%, and revenue will increase by 15.7% compared with the same period last year.
The focus of the company: one of the largest steel enterprises in Guangdong, the regional supply and demand pattern is good, integrate short-process steel enterprises in the province, enhance market influence; capital control capacity continues to improve, actively promote product structure upgrading, profit toughness is expected to be enhanced, dividend situation is improved, PB_LF valuation is low since 2011.
Profit forecast and investment advice: it is estimated that the company's EPS for 21-23 is 1.50max 1.79max 2.04 yuan per share, corresponding to the closing price on May 12, 21-23, and the PE for 21-23 years is 3.75max 3.16max 2.76 times, with a net asset per share of 5.20 yuan per share. With reference to the comparable company valuation, the company is given a 6-fold PE, in 2021 corresponding to a fair value of 9.00 yuan per share in 2021, maintaining a "buy" rating.
Risk tips. Macroeconomic fluctuations; mainstream mineral production is not up to expectations, iron ore prices have risen sharply; the negative growth of crude steel production in the industry is lower than expected; the completion of planned output is lower than expected.