This report is read as follows:
Infrastructure construction is speeding up, and steel demand remains strong in 2019. The company is a leading steel enterprise in Gansu Province, the advantage of iron ore resources helps the company to further promote cost control, and the company's performance is expected to continue to grow. Coverage for the first time, giving a "overweight" rating.
Main points of investment:
Coverage for the first time, giving a "overweight" rating. The company is a leading iron and steel enterprise in Gansu Province, and we predict that the EPS in 2019-2021 will be 0.04,0.05,0.06 yuan respectively. With reference to the valuation of similar companies, we will give the company a valuation of PB 1.40X in 2019, corresponding to the target price of 2.37 yuan, and give the company an "overweight" rating.
Car sales are expected to stabilize and plate demand may pick up gradually. Car sales data picked up in June, superimposed dealer inventories continued to decline, and car sales may have hit bottom. We believe that with the introduction of the national automobile stimulus policy and the landing of the sixth national emissions this year, the demand for cars is expected to stabilize and pick up. The demand for home appliances is expected to remain stable during the year, and the demand for sheet metal will gradually pick up as the car picks up.
Infrastructure is expected to accelerate the recovery, steel demand may remain relatively strong. The central government issued a document allowing special bonds to be used as qualified capital for major projects, which actually relaxed the previous requirement that debt funds could not be used as project capital, which is conducive to magnifying the prying effect of local finance and speeding up the progress of key infrastructure projects. infrastructure is expected to accelerate the recovery and further boost steel demand. Under the background of the current high-yield energy utilization rate of steel enterprises, steel prices are easy to rise and difficult to fall.
The advantage of iron ore resources is highlighted, and the company's performance is expected to continue to release. The company is rich in iron ore resources, iron ore self-sufficiency rate in the forefront of the industry. The company has four mines, including Huashugou Mining area of Jingtieshan Mine, Heigou Mining area of Jingtieshan Mine, Limestone Mine and Dolomite Mine, with iron ore reserves of 350 million tons. In recent years, the scale of mining and separation of its own iron ore is stable, and it has completed iron ore shipments of 8.6607 million tons in 2018. The self-sufficiency rate of iron ore reached 58%, ranking in the forefront of the industry. In the context of the iron ore cycle entering the upward phase, the company's advantages in iron ore resources are highlighted, which will help the company to further carry out cost control, and the company's performance is expected to usher in sustained growth.
Risk hint: macroeconomic decline accelerates; supply rises faster than expected
