This report is read as follows:

The company is a leading enterprise in the processing and distribution of automobile and home appliance steel in China, and it is a leading industry in competitiveness. The company steadily promotes aluminum die-casting business, aluminum die-casting will become the company's second growth curve. Coverage for the first time, giving a "overweight" rating.

Main points of investment:

Coverage for the first time, giving a "overweight" rating. We predict that the EPS of the company from 2022 to 2024 will be 1.19pm 1.44 yuan respectively. Corresponding to the net profit of 408, 517, and 626 million yuan. With reference to the valuation of similar companies, the company will be given 25 times PE in 2022, corresponding to the target price of 23.50 yuan. Coverage for the first time, giving a "overweight" rating.

The company's performance growth may exceed market expectations. The market believes that the company is mainly engaged in iron and steel trade, the main business risk is high, the industry barriers are low, the profit volatility is high, and the growth rate of company performance is slow. And we believe that, different from the profit model of iron and steel trade to earn the difference between buying and selling prices, the company directly faces the terminal and relies on service terminal customers to create value, the company's profitability is stable, and the company's performance will follow the release of investment and production energy. The growth rate of the company's performance will exceed market expectations.

Depending on the advantages of scale and layout, capacity expansion will lead to the growth of the company's performance. Automobile, home appliance steel processing and distribution mainly rely on service terminals to improve circulation efficiency to create value, and its business model is to serve customers rather than judge steel prices. The company's steel processing and distribution capacity of 1 million tons / year, automotive steel market share of about 7.5%, leading in China. The advantage of the company's scale is obvious, and the reasonable base layout and a high degree of information guarantee the company's ability to effectively match the upstream and downstream needs. We believe that with the commissioning of 670000 tons of production capacity, the company's performance will maintain rapid growth.

Aluminum die-casting project will become a new performance growth point of the company. In 21 years, the company announced that it planned to build an aluminum die-casting project in Shucheng County, Anhui Province, and has completed the purchase of land. Aluminum die-casting downstream customers and the company's original customers have a high degree of repetition, which is a strong extension of the company's existing business, and the downstream demand growth rate of aluminum die-casting industry is high, we expect aluminum die-casting will open the second growth curve for the company.

Risk hint: the progress of the fund-raising project is not as expected, and the progress of the aluminum die-casting project is not as expected.