Event
The company released its 2021 semi-annual report on August 20, with revenue of 25.46 billion yuan in the first half, an increase of 89.79 percent over the same period last year, and a net profit of 986 million yuan, an increase of 159.24 percent over the same period last year.
Comment
Benefit from the rise in steel prices, vigorously promote high-end products. Benefiting from the recovery of downstream demand after the epidemic, steel prices rose sharply. Q2 achieved a net profit of 627 million yuan in the single quarter, an increase of 163.77 percent over the same period last year. In the first half of the year, it produced 540900 tons of coke, 2.1077 million tons of hot metal, 2.2393 million tons of slab and 2.2665 million tons of hot coil, which was the same as that in the same period last year. The company deepens "1x 3 + α"
According to the product strategy, high-quality and characteristic products accounted for 54.6%, an increase of 6.8% over the same period last year, and investment in R & D increased by 110% over the same period last year. More than 10 kinds of new steel products were cultivated and trial-produced in the first half of the year, and we are committed to developing high-gross steel products.
Continue to give full play to regional advantages, reduce costs and increase efficiency significantly. Through technical transformation, the company has made rapid progress in the ultra-low emission project. The transformation of No. 2 blast furnace is expected to be completed in the second half of the year. In the first half of the year, the cost of the same caliber is reduced by 54.86 million yuan, and the policy utilization efficiency is achieved by 95.11 million yuan. Sulfur dioxide emissions decreased by 30.7%, particulate emissions decreased by 12.6%, ammonia nitrogen emissions decreased by 74%, total nitrogen emissions decreased by 5.9%, and energy consumption per ton of steel decreased by 1.53%. In the first half of the year, Zida Logistics was acquired to further control the transportation costs of commercial and trade business.
IDC business is progressing steadily. In April 2021, the company acquired a 100% stake in Hangzhou Iron and Steel Group data Company and expanded the number of cabinets. It operates synchronously with the first phase of the cloud computing data center project of Hangzhou Iron and Steel Co., Ltd., and currently has 5500 self-operated cabinets. The first phase of the Zhejiang Cloud Computing Center project, which began construction in July 2020, includes five data centers, which are expected to be partially delivered and put into use by the end of the year. The company uses its own resources to develop IDC business, with the advantages of land location and land reserve; has an energy consumption index of 182600 tons of standard coal, and existing substations can provide independent power for the data center; IDC computer room is close to the urban area, and the potential user group is rich. At the same time, as a state-owned enterprise, the company has obvious advantages in the construction of "government cloud", and its future development is worth looking forward to.
Profit Forecast & Investment suggestion
It is estimated that the net profit of the company from 2021 to 2023 is 1.851 billion yuan, 1.983 billion yuan and 2.109 billion yuan respectively, and the EPS is 0.55,0.59,0.62 yuan respectively, maintaining the "buy" rating.
Risk hint
The development of IDC business is not as expected; the price of steel raw materials is rising.