\u3000\u3000 Hunan Valin Steel Co.Ltd(000932) (000932)
Event: the net profit attributable to the parent company in 2021 is expected to be 9.5 billion yuan to 9.9 billion yuan, with a year-on-year increase of 48.55% to 54.81%, a record high; The net profit attributable to the parent company in the fourth quarter is expected to be 1.736 billion yuan to 2.136 billion yuan, an increase of 11.45% to 37.13% year-on-year and a decrease of 2.43% to 20.7% month on month.
In 2021, the non net profit deducted by the company is expected to be 9.4 billion yuan to 9.8 billion yuan, with a year-on-year increase of 47.45% to 53.73%; Non net profit deducted in the fourth quarter is expected to be 1.672 billion yuan to 2.072 billion yuan, with a year-on-year increase of 7.57% to 33.31% and a month on month decrease of 4.57% to 23%.
In the fourth quarter of 2021, the output of crude steel in Hunan decreased by 15% month on month, and the gross profit of spot steel increased by 21% month on month: the output of crude steel in Hunan Province in 2021 was 26.1268 million tons, a year-on-year decrease of 0.01%, of which the output of crude steel from October to December was 5.445 million tons, a year-on-year decrease of 20.66% and a month on month decrease of 15.19%. Taking the comprehensive gross profit per ton of steel in Hunan as an example (the cost lags behind 30 days), the average gross profit per ton of steel from October to December 2021 is 744 yuan, which is the same as that from July to September; If the gross profit per ton of steel in the current period is calculated (without considering the cost lag factor), the average gross profit per ton of steel from October to December is 992 yuan, an increase of 20.77% compared with that from July to September.
The company pays attention to the adjustment of product structure, and its profitability is expected to be greatly improved in the future: on October 26, 2021, the company announced that its subsidiary Valin Henggang will increase the capital of 600 million yuan to Hengyang Valin continuous rolling pipe company with its own funds to increase investment in the fields of quality and efficiency improvement, intelligent manufacturing, energy conservation and environmental protection, so as to further improve the industrial foundation and industrial chain level of seamless steel pipe; Hunan Valin Lianyuan Iron and Steel Co., Ltd., a wholly-owned subsidiary, plans to build a product structure adjustment and upgrading project guided by advanced iron and steel materials. The construction content is to build a 1580mm hot rolling line. The production products mainly include electrical steel, medium and high carbon steel, cold rolling and deep processing steel, hot-rolled commodity materials, etc. the project investment is 2.254 billion yuan and is expected to be put into operation in January 2023. The company gradually optimizes the existing product structure and is expected to significantly improve its profitability in the future.
The convertible bonds entered the stock exchange period, and the shareholding ratio of Valin Group decreased to 43.76%. In order to further revitalize the assets and support the company to refine and strengthen the main iron and steel industry, the controlling shareholder Valin Group publicly issued convertible corporate bonds with Hunan Valin Steel Co.Ltd(000932) shares as the subject matter of stock exchange from 2019 to 2020, with the issuance scale of 2 billion yuan and 1.5 billion yuan respectively, and entered the stock exchange period on August 26, 2021, As of October 23, 2021, the equity ratio of the company held by Valin Group and its persons acting in concert had decreased to 43.76%, and the total balance of payable bonds was 46.8705 million yuan.
Profit forecast, valuation and rating: affected by the reduction policy of crude steel output, we reduced the net profit attributable to the parent company by 4.67%, 4.65% and 4.55% from 2021 to 2023 to RMB 9.723 billion, RMB 10.427 billion and RMB 10.969 billion, corresponding to EPS of RMB 1.41, 1.51 and 1.59 respectively, Hunan Valin Steel Co.Ltd(000932) as a leading iron and steel enterprise, it will greatly benefit from the improvement of profitability brought by the optimization of product structure, Therefore, we maintain the company’s “overweight” rating.
Risk warning: the price of raw materials has risen sharply; The downstream demand for steel fell sharply.
