\u3000\u30 Shenzhen Quanxinhao Co.Ltd(000007) 08 Citic Pacific Special Steel Group Co.Ltd(000708) )
The leader of special steel has stable performance and can resist the cycle. In 2021, the annual revenue was 97.332 billion yuan, a year-on-year increase of 27.58%, the net profit attributable to the parent was 7.953 billion yuan, a year-on-year increase of 31.84%, and the net profit not attributable to the parent was 7.821 billion yuan, a year-on-year increase of 33.85%. In the fourth quarter, facing the impact of adverse factors such as the rise in the price of raw materials, the company continued to reduce costs and increase efficiency, responded positively, and achieved a revenue of 23.116 billion yuan, a month on month decrease of 8.01%, and a net profit attributable to the parent company of 1.891 billion yuan, a month on month increase of 0.91%. In addition, the company plans to distribute a cash dividend of 8 yuan (including tax) for every 10 shares to all shareholders.
Production capacity and output increased steadily. With the full completion of the continuation project of Qingdao special steel, the company has an annual production capacity of more than 16 million tons of special steel, forming a coastal and riverside industrial chain layout. In 2021, the company achieved 14.53 million tons of steel sales, with a year-on-year increase of 3.87%, exceeding the annual target. In 2022, the company’s sales target will be further increased to 14.9 million tons and strive to 15.5 million tons; During the “14th five year plan” period, the company strives to achieve an annual special steel output of more than 20 million tons, with large growth space.
Continuous optimization of product structure. With the change of market demand, the company actively adjusted the variety structure, improved the added value of products, and made substantial progress in the research and development of key materials. In 2021, the company’s automobile steel sales volume ranked first in China for 14 consecutive years, and the classified proportion increased by 8 percentage points to 33%. In terms of sales of “three high and one special” products, the company’s high-temperature / corrosion-resistant alloy increased by 44.7%, which is widely used in new rocket engines with small and medium thrust; High strength steel increased by 62.7%, opening up the international civil aviation market, and the market share of aerospace engine shell steel exceeded 50%. At present, the company has successfully issued 5 billion yuan of convertible bonds, of which 1.2 billion yuan is intended to be used for the optimization and upgrading project of “three high and one special” product system. After the completion of phase II and phase III transformation projects of special metallurgy, the added value of the company’s products will be further improved.
The gross profit margin of advantageous wire products will be increased again. In terms of products, rods and wires are the traditional advantageous products of the company, and the gross profit margin remains high for a long time. Alloy steel bar is the most important performance source of the company, with gross profit accounting for 54.85% in 2021. The gross profit margin of alloy steel wire rod continues to increase to 20.37% in 2021. In terms of pipes, the company successfully participated in Tianjin steel pipe and fully participated in production, operation and management. The actual annual output of seamless steel pipe under control exceeded 5 million tons, ranking first in the world.
Risk tip: the demand for steel has fallen sharply; Market competition has intensified significantly.
Investment advice: maintain the “buy” rating. At present, the development space of China’s special steel market is huge. As a leading enterprise, the company has a clear growth path, prominent market position and stable business performance, which belongs to the scarce target of the special steel industry. Taking into account the changes in market prices, we slightly lowered our performance forecast. It is estimated that the net profit attributable to the parent company from 2022 to 2024 will be 8.8/101/11.3 billion yuan, with a year-on-year growth rate of 10.1/15.3/11.7%; Diluted EPS is 1.73/2.00/2.23 yuan, and the corresponding PE of the current stock price is 11.61/10.07/9.02x, maintaining the “buy” rating.
