The homing net profit of 20Q2 is + 73% / month-on-month, respectively.
The company's 20H1 realized operating income of 610 million yuan (yoy+0.3%) and net profit of 130 million yuan + 48.8%). 20Q2 realized operating income of 360 million yuan (yoy+11.4%,qoq+40.7%) and net profit of 90 million yuan (yoy+72.7%,qoq+204.4%). We believe that iron ore prices are expected to be strong, and the company's costs have improved significantly, so we raise the profit forecast and expect to maintain the "overweight" rating of EPS0.39/0.40/0.40 yuan in 20-22 years.
The gross margin of 20H1 iron concentrate powder increased significantly.
The output and sales volume of iron concentrate powder of 20H1 Company were 63 and 610000 tons respectively, which were-6% and-5% respectively compared with the same period last year, mainly due to the impact of the epidemic, and the sales volume declined; the output went down or the mine in Hou Zhuang had basically been mined, and entered the stage of facility recovery and filling treatment. In the same period, the unit selling price, cost and gross profit of the company's iron concentrate powder were 783 yuan, 465 yuan and 318 yuan per ton respectively, which were + 5%,-14% and + 58% respectively compared with the same period last year. In the same period, the average prices of Australian PB powder and Tangshan iron powder are + 3% and + 5% respectively compared with the same period last year. The company's gross profit increased significantly, mainly due to a large reduction in costs, or because the mining of the more difficult Houzhuang mine entered the ore closure stage, resulting in a decline in the overall cost, as well as the company to increase market assessment efforts, reduce costs and increase efficiency. 20H1's gross profit margin is 37%, year-on-year + 10pct, of which Q2 gross profit margin is 40%, year-on-year + 15pct, month-on-month + 9pct.
The rate of 20H1 expenses rose slightly, and the proportion of items receivable decreased.
The period expense rate and non-return net interest rate of 20H1 are 10% and 21% respectively (yoy+1/+7pct), of which the larger management expense rate is 9% (yoy+2pct), which is mainly the salary of managers + 47% compared with the same period last year. The sales, management and R & D expenses of 20H1 are + 21%, + 23% and-33% respectively compared with the same period last year.
In addition, the net operating cash flow of 20H1 is 210 million yuan (yoy-13%), mainly due to the maturity of 50 million yuan in time deposits in the same period last year, resulting in a higher amount of other cash received; 20H1 accounts for 65% of revenue, increasing the ability to occupy funds downstream.
The supply and demand pattern is better, and the price of iron ore may be on the strong side.
There was no significant increase in the four major mine production targets for 2020. According to Mysteel, Vale SA expects the full-year output to be close to the previous target lower limit; the median annual target output of BHP Group Ltd and FMG is the same as that of the previous fiscal year; and Rio Tinto PLC maintains his previous sales target of about-1% and 2% compared with the same period last year. In addition, according to Mysteel, the national utilization rate of blast furnace capacity remained high, with an average of 86.8 per cent (yoy+2.6pct) in the first three weeks of August, and the total daily consumption of imported mines continued to be higher than in previous years since March. Considering the improvement of domestic infrastructure investment, the low inventory of superimposed iron ore port and the historical high port dredging volume, we expect the price of Q3 and Q4 iron ore to be on the strong side. According to Zoomlion, the price of Australian PB powder (excluding tax) on August 21 was 841 yuan per ton, up 19% from the end of June.
It is expected to benefit from the rising mineral prices and maintain the "overweight" rating.
We believe that the ore price still has an upward pattern in the later stage, and the company's cost has improved better, so the profit forecast is revised upwards. It is estimated that the company's BVPS in 20-21 is 5.52 yuan (the previous value is 4.65 pound 4.97 pound), corresponding to 1.51 times of PB 1.64 pound, and 2.24 times of the company's average PB. Considering that the company's iron ore reserves are significantly lower than those of the four major mines. Give the company 1.75 times PB in 2020, with a target price of 8.25 yuan (the previous value is 5.58-5.81 yuan), and maintain the "overweight" rating.
Risk tips: the four major mineral sales rose higher than expected; downstream demand fell sharply; and the global epidemic worsened.