\u3000\u30 Shenzhen Quanxinhao Co.Ltd(000007) 08 Citic Pacific Special Steel Group Co.Ltd(000708) )
Core view
The company released its 2021 annual report, and achieved a revenue of 97.33 billion yuan, a year-on-year increase of 27.6%; The net profit attributable to the parent company was 7.953 billion yuan, with a year-on-year increase of 31.8%. The basic earnings per share was 1.58 yuan / share, the weighted roe was as high as 26.78%, the proposed dividend per share was 0.8 yuan, and the dividend rate was as high as 50.6%.
Under the pressure of “double carbon”, the sales volume still increased slightly, and the output target of 20 million tons in the 14th five year plan is unswerving. In 2021, the company achieved 14.53 million tons of steel sales, with a year-on-year increase of 3.9%. In 2022, the company’s target sales volume was 14.9 million tons, striving to 15.5 million tons. During the “14th five year plan” period, the annual output of special steel is planned to exceed 20 million tons.
The product structure continues to be optimized and the high-end field continues to take the lead. In 2021, the company’s “three high and one special” products were newly certified by 32 second and third parties, including ultra-high strength steel, high temperature / corrosion resistant alloy and special stainless steel, with a year-on-year increase of 62.7%, 44.7% and 113.3% respectively; In terms of product application fields, the company’s sales of bearing steel, automobile steel and continuous casting round billet for wind power all hit a record high, and maintained the first sales volume in China.
R & D drive, strong product force, and the development volume of new products exceeds 2.5 million tons. In 2021, the R & D expense rate of the company reached 3.58%, with a year-on-year increase of 28.8%. In the whole year, the company obtained 313 authorized patents, including 72 invention patents, and continued to make new breakthroughs in localization and substitution, such as gears and non adjustable materials for new energy vehicles, Liebherr ultra long boom tubes for marine use, etc.
Industrial investment has achieved initial results, and lean management has promoted cost reduction and efficiency increase by 3 billion yuan. In terms of industrial layout, in January 2021, the company participated in the operation of Tianjin steel pipe, contributing an investment loss of about 260 million yuan and withdrawing 60 million yuan of impairment provision, which dragged down the company’s performance. However, the main body of Tianjin steel pipe has reduced its loss by nearly 1 billion yuan compared with 2020, which is expected to continue to improve in 22 years, and the investment income of XCMG’s mixed reform project in 21 years is more than 30 million yuan; In terms of cost reduction and efficiency increase, the company achieved cost reduction and efficiency increase of 3 billion yuan in the same caliber, and only the cost reduction of tieqian benchmark exceeded 980 million yuan
Profit forecast and investment suggestions
As the gross profit per ton of steel and R & D investment of the company increased significantly in 2021, we adjusted the EPS of the company from 2022 to 2024 to 1.84, 2.06 and 2.32 yuan (compared with 1.86 and 2.04 yuan in 20222023). According to the valuation of 14x PE of the comparable company in 2022, the purchase rating is maintained, and the target price is 25.76 yuan.
Risk tips
The progress of industrial and enterprise structure transformation and upgrading was lower than expected. The development speed of special steel downstream industry is lower than expected
