Main points of investment:
Maintain the "overweight" rating. In the first three quarters of 21, revenue reached 99.6 billion, an increase of 82% over the same period last year, and the net profit of returning home was 5.8 billion, an increase of 401% over the same period last year, and the performance exceeded expectations. Considering the steady growth of the company's production, it raised its EPS for 21-23 years to 1.25max 1.41max 1.46 yuan (formerly 1.13max 1.29max 1.33 yuan). Refer to similar companies to give it a 21-year PE valuation of 6.50 times, maintain the target price of 8.1 yuan, maintain the "overweight" rating.
The output increases steadily and the product structure is optimized. In the first three quarters of 21, the company's output of automotive plates, electrical steel, tinplate and pickling automotive steel was 267,114,47 and 540000 tons respectively, an increase of 7.8%, 0.13%, 8.9% and 45.8% respectively over the same period last year. The output of the company's key products increased steadily, among which high value-added products such as ultra-high strength steel and high brand non-oriented silicon steel grew rapidly, the company's product structure continued to optimize, and profitability continued to improve. In the first three quarters of 21, the company's net profit rate on sales was 6.9%, up 4.1 percentage points from the same period last year.
The structure of assets and liabilities has been continuously optimized, and various expenses have been continuously reduced. According to the company announcement, by the end of the third quarter of 2021, the company's asset-liability ratio was 70.25%, down 4.36% from the same period last year; the company's expense rate during the period was 3.33%, down 3.38% from the same period last year. Among them, the rates of sales, management and financial expenses decreased by 1.88%, 0.38% and 1.12% respectively compared with the same period last year. According to the company's third-quarter results presentation, the company's depreciation per ton of steel and financial expenses per ton of steel fell by 16% and 13% respectively in the first three quarters of 2021 compared with the same period last year.
The company's production capacity is expanding steadily and its profitability is expected to increase gradually. The company stopped production and began to relocate at the end of 2010. in order to build a new production base, the company invested about 1500-160 billion yuan, bringing it a heavy depreciation and financial burden. After nearly 10 years of development, the company's production capacity has expanded steadily, and the depreciation per ton of steel and financial expenses have continued to decline. We believe that as the company continues to steadily expand production and optimize the product structure, its per-ton steel depreciation, per-ton steel costs and profits per ton of steel are expected to continue to be optimized, and its profitability will be gradually improved.
Risk hint: capacity expansion is not as expected, unpredictable safety accidents.