Matters: the company announced its three-quarter report in 2017, with operating income of 30.461 billion yuan, up 10.09% over the same period last year, and net profit of 665 million yuan, up 47.23% over the same period last year, corresponding to 0.11 yuan of EPS. Of this total, the total operating income in the third quarter was 11.133 billion yuan, an increase of 20.50 percent over the same period last year, an increase of 9.06 percent over the same period last year; and the net profit of returning to the mother was 314 million yuan, an increase of 90 million yuan over the same period last year and 186 million yuan from the same period last year. In terms of the latest share capital, the company's EPS in the third quarter was 0.05yuan and EPS in the first half was 0.06yuan.
Peace viewpoint:
Q3 performance increased significantly compared with the same period last year and month-on-month: the company's net profit in the third quarter was 314 million yuan, up 40.18% from the same period last year and 145.31% from the same period last year. Although the company made a total of 588 million yuan in asset impairment loss provision for Yicheng Iron and Steel Base and Yuzhong Iron and Steel Base in the third quarter, affecting the company's combined profit of 588 million yuan in the first three quarters, the net profit returned to the home in the first three quarters still increased by 47.23% compared with the same period last year.
On the one hand, the company washed back its deferred income tax assets in 2016, which led to a decrease in income tax expenses this year; on the other hand, it also benefited from the impact of rising prices of the company's products. The company has a production capacity of 10 million tons of steel, covering three categories: plate, strip, wire bar and stainless steel. In the first three quarters, the average tax price of the company's plate, strip, wire bar and stainless steel products reached 4161.08 yuan / ton, 3885.24 yuan / ton and 11101.32 yuan / ton respectively, up 41.63%, 50.73% and 24.85% respectively over the same period last year.
Compared with the first half of the year, the price of the product increased by 2.41%, 5.03% and 2.69%, respectively. The increase in product prices ensures a substantial increase in the company's performance.
Yugang officially resumes production, which is expected to contribute to full-year performance growth: Yugang, which has a crude steel production capacity of 2.6 million tons, voluntarily halted production and maintenance due to the extreme recession in the industry in 2015. With the continuous recovery of the industry, Yugang officially resumed production on October 21. We believe that under the circumstances that there is no fundamental change in the supply and demand fundamentals of the industry, steel prices are still expected to maintain the current relatively high level in the fourth quarter, and steel companies are still able to maintain high profits. Yugang's resumption of production will directly lead to an increase in the company's future product output, which will directly increase the company's fourth-quarter performance without a sharp decline in prices. We expect the company's full-year performance to remain at a high level.
Profit forecast and investment advice: we maintain the previous profit forecast and expect the company's 2017-2019 net profit to be 930 million yuan, 1.27 billion yuan and 1.51 billion yuan respectively, and EPS 0.15,0.20 yuan and 0.24 yuan respectively. The company is a leading steel enterprise in the northwest, with a high market share in the product area and an increase in superimposed output. It is optimistic about the company's performance growth and maintains a "recommended" rating.
Risk hint: terminal demand fluctuates more than expected; interest rates continue to rise.
