This report is read as follows:
Baotou Iron and Steel Co., Ltd. is a leading steel enterprise in northern China, which is rich in rare earth resources. In 22 years, the company's steel business will benefit from the expected demand growth in the context of "steady growth", while the performance of the rare earth sector will benefit from strong rare earth prices.
Main points of investment:
Maintain the overweight rating. In 21 years, the company's revenue was 86.2 billion yuan, up 45% from the same period last year; the net profit returned to its mother was 2.866 billion yuan, up 606% from the same period last year. Considering that due to the sharp rise in raw material prices, the company's 2021Q4 single-quarter results were slightly lower than expected, downgrading its 22-23 EPS forecast of 0.11 EPS 0.12 yuan (formerly 0.14 0.15 yuan), adding 24-year EPS forecast of 0.13 yuan, maintaining the target price of 3.02 yuan, and maintaining the "overweight" rating.
In the context of "steady growth", the steel business will benefit from a pick-up in demand. In 2021, the company's steel sales totaled 15.73 million tons, an increase of 7.25% over the same period last year. Among them, the sales of plates, wire bars, profiles and pipes were 966,260,190 and 1.57 million tons respectively, accounting for 61%, 17%, 12% and 10% respectively.
We believe that under the background of "steady growth" and gradual relief of automobile core shortage in the past 22 years, the downstream demand of the company's steel products will pick up significantly, and its steel sector performance is expected to continue to improve.
Rare earth prices remain strong, and the performance of the rare earth sector maintains high growth. The company renewed the "rare earth concentrate supply contract" with Northern rare Earth, agreeing to adjust the price of rare earth concentrate to 26887 yuan / ton (dry weight, REO=51%) in 22 years, an increase of more than 65% over the agreed price in 21 years. According to the company's planned production of 160000 tons of rare earth concentrate in 22 years, its rare earth concentrate revenue is expected to exceed 4 billion yuan, an increase of 50% over the same period last year. The company's rare earth concentrate smelting costs are relatively fixed, and we expect its rare earth business profits to maintain rapid growth.
The rare earth industry maintains a high demeanor. The lower reaches of rare earths are mainly permanent magnetic materials and catalysts, accounting for 29% and 20% respectively. Since 21 years, the market acceptance of new energy vehicles has increased rapidly, and the global permeability of new energy vehicles has increased rapidly, which has led to the rapid growth of the demand for permanent magnet materials. At the same time, "carbon neutralization"
In the background, the increase in wind power installation also supports the demand for permanent magnet materials. We believe that the rare earth industry will remain high in 22 years.
Risk tip: sales of new energy vehicles have fallen sharply, and real estate investment has fallen sharply.