VALIN STEEL(000932):INDUSTRY-WIDE WEAKNESS WEIGHS ON EARNINGS; AVERAGE VALUATION TO RISE IN THE MEDIUM TERM
VALIN STEEL(000932):INDUSTRY-WIDE WEAKNESS WEIGHS ON EARNINGS; AVERAGE VALUATION TO RISE IN THE MEDIUM TERM
Earnings improved marginally, as demand recovered. In 1H24, the company's earnings were under pressure, as demand did not recover notably and raw material prices remained high. The price per tonne of steel dropped by 3.4% YoY to Rmb4,407 and the gross profit per tonne of steel dropped by 32.3% to Rmb 355. In 2Q24, the company's earnings improved marginally, as demand recovered. GM rose 2.3ppt QoQ to 8.5% (-3.1ppt YoY).1H24 results miss our expectations
1H24的結果改善低於我們的預期
Valin Steel announced its 1H24 results: Revenue fell 4.5% YoY to Rmb75.95bn. Net profit attributable to shareholders dropped by 48.2% YoY to Rmb1.33bn. Earnings missed our expectations, as the recovery of demand was tepid in 1H24.
華菱鋼鐵宣佈其2024年上半年業績：營業收入同比下降4.5%，達人民幣759.5億元。歸屬股東的淨利潤同比下降48.2%，達人民幣13.3億元。盈利未達預期，因爲2024年上半年需求復甦乏力。
Proportion of special steel continued to rise; overseas sales volume hit a new high. In 1H24, the company's steel sales volume dropped by 6% YoY to 12.7mnt, of which 64.6% were special steel. Sales volume of special steel as a percentage of total steel sales volume increased by 1.2ppt in 1H24. In 2Q24, overseas sales volume jumped 38% YoY to 0.53mnt. All the steel sold in overseas markets were high-value-added products.
特種鋼比例繼續上升；海外銷售量創新高。2024年上半年，該公司鋼材銷售量同比下降6%，至1270萬噸，其中64.6%爲特種鋼。特種鋼銷售量佔總鋼材銷量的比例在2024年上半年增加了1.2個百分點。2024年第二季度，海外銷量同比增長38%，達530萬噸。所有在海外市場銷售的鋼材都是高附加值產品。
Earnings improved marginally, as demand recovered. In 1H24, the company's earnings were under pressure, as demand did not recover notably and raw material prices remained high. The price per tonne of steel dropped by 3.4% YoY to Rmb4,407 and the gross profit per tonne of steel dropped by 32.3% to Rmb 355. In 2Q24, the company's earnings improved marginally, as demand recovered. GM rose 2.3ppt QoQ to 8.5% (-3.1ppt YoY).
盈利略有改善，隨着需求的恢復。2024年上半年，由於需求沒有明顯復甦，而原材料價格仍然較高，該公司的盈利承壓。每噸鋼材價格同比下降3.4%，至人民幣4407元，每噸鋼材的毛利潤同比下降32.3%，至人民幣355元。2024年第二季度，隨着需求恢復，公司盈利略有改善。邊際毛利率環比上升2.3個百分點，至8.5%（同比下降3.1個百分點）。
Period expense ratio remained stable. The company increased cost control. In 2Q24, selling and G&A expenses declined by 6% and 7% YoY. In 1H24, expenses per tonne of steel remained stable at Rmb4,052.
期間費用率仍然穩定。該公司加強成本控制。2024年第二季度，銷售和管理費用同比分別下降6%和7%。2024年上半年，每噸鋼材的費用保持穩定，爲人民幣4052元。
Investment income and other income increased substantially. The firm's investment income and other income rose Rmb70mn and Rmb1.05bn YoY in 1H24, due to interest from large-denomination certificates of deposit (CDs) and increased value-added tax (VAT) deductions at subsidiaries.
投資收益和其他收入大幅增加。該公司2024年上半年的投資收益和其他收入分別同比增長7000萬元和10.5億元，因大額存單利息和子公司增值稅抵扣增加。
Trends to watch
需要注意的趨勢
Potential of organic growth notable; product advantages to improve. The company continues to add new types of special steel products and improve its competitive advantages in products.
有機增長潛力顯著；產品優勢將會進一步改善。該公司不斷增加新型特種鋼產品，並提高產品的競爭優勢。
Silicon steel: In 1H24, the company developed 30 new grades of products. Sales volume rose 46% YoY to 0.99mnt. The construction of the Phase II silicon steel project accelerated. The company expects this project to start production in early 2025.
硅鋼：2024年上半年，公司開發了30個新產品牌號。銷量同比增長46%至0.99萬噸。硅鋼二期項目建設加快，公司預計該項目將在2025年初投產。
Automotive sheets: The Phase II project and the patented product certification proceeded smoothly. The company expects this project to operate at the design capacity by end-2024.
汽車板：二期項目和專利產品認證順利進行。公司預計該項目將在2024年底達到設計產能。
Industrial bars and wire rods: The proportion of special steel in total sales volume increased steadily. We expect the percentage of special steel to increase by 5-10ppt to 25-30% in 2025.
工業棒材和線材：特殊鋼在總銷售量中的份額穩步增加。預計到2025年，特殊鋼的佔比將增加5-10個百分點，達到25-30%。
We are upbeat on the organic growth of the company, given the increased proportion of high-end products in its product portfolio and its notable product advantages.
鑑於公司產品組合中高端產品比例的增加以及其顯著的產品優勢，我們對公司的有機增長持樂觀態度。
Healthy cash flows; average valuation to increase in the medium term. The company maintains solid earnings and sound business operations despite the cyclical downturn in the steel industry. In 2Q24, its net operating cash flow and free cash flow rose Rmb5.1bn and Rmb4.9bn YoY to Rmb5.3bn and Rmb4.1bn. In addition, the company continues to increase cash dividend payments. Its dividend payout ratio exceeded 30% in 2023. We think the company will continue to maintain healthy cash flows, as its capex declines and downstream demand recovers. We expect its average valuation to increase in the medium term.
健康的現金流；中期內平均估值上升。儘管鋼鐵行業週期性下行，該公司仍保持穩定的盈利能力和健康的業務運營。2024年第二季度，其淨營業現金流和自由現金流同比增長51億元和49億元，分別達到53億元和41億元。此外，公司繼續增加現金股息支付。其2023年的股息支付比率超過30%。我們認爲在資本支出下降和下游需求恢復的背景下，該公司將繼續保持健康的現金流。我們預計其中期內平均估值將提高。
Financials and valuation
財務和估值。
We cut our attributable net profit forecast 44.5% to Rmb3.15bn for 2024 and 38.7% to Rmb4.29bn for 2025, as the decline of gross profit per tonne of steel in 1H24 was sharper than expected. The stock is trading at 8.7x 2024e and 6.4x 2025e P/E. We maintain an OUTPERFORM rating, given the firm's healthy cash flows. We cut our target price 34.1% to Rmb5.01 to reflect a low sector valuation. Our TP implies 11.0x 2024e and 8.1x 2025e P/E, offering 25.9% upside.
我們將2024年公司可歸屬淨利潤預測下調44.5%至31.5億元，2025年下調38.7%至42.9億元，因爲2024年上半年鋼鐵每噸毛利潤下降幅度超過預期。該股票目前交易於2024年估值PE爲8.7倍，2025年估值PE爲6.4倍。鑑於公司擁有健康的現金流，我們持續給予超越大市的評級。我們將目標價下調34.1%至5.01元，以反映板塊估值較低。我們的目標價相當於2024年估值PE爲11.0倍，2025年估值PE爲8.1倍，上升空間爲25.9%。
Risks
風險
Real estate sector weakens more sharply than expected; global economic downturn deteriorates.
房地產業板塊走弱速度比預期更加明顯；全球經濟衰退惡化。
譯文內容由第三人軟體翻譯。