This report is read as follows:

The company's results in the first three quarters of 2022 were slightly lower than expected. The company has a significant advantage in cost reduction, and we expect the company's profitability and stability to continue to lead the industry. We believe that the company is a cost-effective leader in the industry.

Main points of investment:

Maintain the "overweight" rating. In the first three quarters of 2022, the company achieved revenue of 18.161 billion yuan, up 13.56% from the same period last year, and realized net profit of 1.086 billion yuan, down 49.28% from the same period last year, slightly lower than expected.

Considering the general pressure on both ends of income and cost in steel enterprises, the company's EPS forecast for 2022-2024 is 0.58, 0.84 and 0.99 yuan, respectively, and the corresponding net profit is 13.6, 19.7 / 2.23 billion yuan. Taking into account the plate valuation adjustment, with reference to similar companies to give the company 2022 12 times PE valuation, downgrade the target price to 6.96 yuan (the original 8.50 yuan), to maintain the "overweight" rating.

The performance of steel enterprises is generally under pressure, and the company outperforms the whole industry. In the third quarter of 2022, although the prices of iron ore and coke fell somewhat, the overall price of raw materials fell lower than that of finished materials, the difference between the purchase and sale of steel narrowed, and the performance of steel enterprises was generally under pressure. The company gives full play to the advantage of reducing cost and increasing efficiency, although the performance has declined compared with the same period last year, but the profit level is still in the forefront of the industry, reflecting that the company has excellent competition periodicity.

During the period, the expense rate reached a new low in the same period of the past years, and the fine management ability is the leader in the industry. The company's cost is already at a low level in the industry, with the company's expense rate of 2.38% in the first three quarters of 2022, a further drop of 0.71 percentage points from the same period in 2021, a record low for the same period in the previous year. The company always insists on reducing cost and increasing efficiency through vertical and horizontal benchmarking, and constantly improves the fine management ability of cost-effectiveness. in the future, the company's low-cost advantage will continue to be maintained, and profitability is expected to always lead the industry.

Low valuation superimposed high dividend, the company is a very cost-effective leader of the long-term material. In the context of the "steady growth" policy, we expect that construction steel demand is still expected to grow faster than expected in the later period, and the plate is expected to meet the repair market.

The company takes into account high dividend, excellent management, low cost, but the valuation is on the low side, we think the company is a cost-effective construction steel leader.

Risk tips: a sharp decline in the macro-economy; downstream demand for construction steel continues to decline.