One of the leading fine plate companies with outstanding product structure and green and low carbon advantages is a listed steel company under Shougang Group. It currently has two major bases in Qianshun and Jingtang, and is one of the leading domestic premium plate companies. As the company's higher capital expenses such as relocation of production capacity and environmental investment are basically completed, the company's depreciation of tons of steel and financial expenses for tons of steel are expected to reach an inflection point. At the same time, the company's product structure and green and low-carbon advantages are remarkable. We believe that the company is expected to gradually enter a harvest period and is optimistic about the company's long-term development. We expect the company's 2023-2025 EPS to be 0.17/0.20/0.23 yuan, respectively, and BVPS to be 6.24/6.36/6.51 yuan, respectively. Referring to comparable company estimates, Wind agreed to expect 0.55x PB in 2024. Considering the company's leading position in automotive panels, electrical steel and other products, the company will be given a valuation of 0.62x PB in 2024, corresponding to the company's target price of 3.94 yuan, maintaining the “gain” rating.
Positioning high-end sheets, leading technology, strategic products guarantee profitability. The company's three strategic products (electrical steel, automobile plate, tinned plate) are in the leading position in the industry. Among them, in terms of electrical steel, the company is the fourth full-temperature process industrialization enterprise in the world. For five consecutive years, ultra-thin high-magnetic-oriented electrical steel has ranked first in domestic sales, leading the development of the industry; in terms of automotive boards, the company has achieved full coverage of high-end customers and has entered the first ranks of domestic tinned plate manufacturers. The proportion of the company's high-end products continues to rise, demonstrating the company's leading advantages in technology, equipment, certification, etc., and at the same time ensuring that the company still has good profit performance at a low point in the industry.
It is the first in the industry to achieve ultra-low emissions throughout the process. The green and low-carbon advantages highlight that the company's Qiangang Steel Base is the first in the industry to achieve ultra-low emission transformation throughout the process and further promote extreme energy efficiency projects. On the one hand, Qiangang Company and Jingtang Company continue to maintain “Class A” environmental performance evaluation enterprises in Hebei Province, and can adopt independent emission reduction measures in accordance with relevant policy requirements. At the same time, the company continues to promote technological innovation and strengthen carbon reduction at the source. According to Wind, the company's ESG rating is A, ranking at the top of the steel industry. In the context of dual carbon, with the official launch of carbon trading, carbon taxes, etc., differences in carbon emissions will directly transform into cost differences between companies, and the company's green and low-carbon advantages are expected to become more prominent.
Group resources guarantee the supply of raw materials and are expected to be injected into listed companies
Shougang Group owns water-mill iron ore, Xingshan iron ore, etc. in China, with a production capacity of 4 million tons of iron powder, and the Jianmacheng iron ore mine, which has the advantages of high reserves and low cost. After completion, it will form 7 million tons of iron powder production capacity. At the same time, Shougang Group holds the Peruvian Iron Ore, which has an annual production capacity of 20 million tons of iron powder. According to the company's 2022 annual report, the Group promised in 2018 that the company is the only platform for the development and integration of Shougang Group's steel and upstream iron ore resource industries in China. Under the circumstances where mining assets achieve continuous and stable profits and the overall situation of the industry does not fluctuate greatly, the group will initiate the injection of high-quality assets such as Shougang Mining into Shougang shares, which is expected to further enhance the company's performance.
Risk warning: Downstream demand falls short of expectations, the industry competition pattern deteriorates, and the progress of projects under construction falls short of expectations.