Baoshan Iron & Steel Co.Ltd(600019) (600019)
Event: the company issued the third phase of A-share restricted stock plan (Draft), granted restricted stock to 2000 people including directors, senior managers, middle managers in key positions, core technology, business, skills and other backbone personnel, and stipulated the performance evaluation from 2022 to 2024.
The total amount of restricted shares to be granted in this plan shall not exceed 500 million shares, and the grant price is 4.29 yuan / share. The total amount of restricted shares to be granted under the plan shall not exceed 500 million shares, accounting for about 2.2453% of the total share capital of the company at the time of announcement of the draft plan; The grant price of restricted shares (including reserved shares) granted under the plan is 4.29 yuan per share, of which the number of restricted shares granted to Baoshan Iron & Steel Co.Ltd(600019) general manager Mr. Sheng Genghong is 660000 shares. Calculated according to the company’s share price (7.16 yuan / share) on December 31, 2021, the corresponding market value is 4.73 million yuan.
Four conditions for exercise: SASAC EVA assessment target / compound profit growth rate / profit position in the industry / roe. The performance assessment indicators corresponding to the three sales restriction lifting periods are: (1) complete the EVA assessment objectives issued by SASAC to China Baowu and decomposed to the company from 2022 to 2024; (2) The compound growth rate of the company’s profit from 2022 to 2024 over the total profit in 2020 shall not be less than 10%; (3) The month on month growth rate of total profits shall not be lower than the 75th percentile or industry average of the benchmarking enterprises, and the total profits shall reach the top three of the benchmarking enterprises; (4) From 2022 to 2024, the roe of the company shall not be lower than 8%, 8.5% and 9% and not lower than the 75th percentile value of the benchmarking enterprise.
Minimum conditions for exercise: it is estimated that the net profit attributable to the parent company from 2022 to 2024 will be RMB 16.6 billion, RMB 17.6 billion and RMB 19.1 billion respectively. (1) According to the calculation of compound profit growth rate: the net profit attributable to the parent company in 2020 is RMB 12.677 billion, so in order to ensure the exercise, the minimum net profit attributable to the parent company in 2022-2024 is RMB 15.3 billion, 16.9 billion and 18.6 billion, and the corresponding PE of the current stock price is 10.4, 9.4 and 8.6 times respectively; (2) Calculated according to ROE conditions: as of the third quarter of 2021, the company’s net assets were 209.3 billion yuan. Calculated according to the growth rate of net assets of 3%, the company’s net profit attributable to the parent company from 2022 to 2024 was 16.6 billion yuan, 17.6 billion yuan and 19.1 billion yuan respectively, and the corresponding PE of the current stock price was 9.9, 9.1 and 8.3 times respectively.
It is proposed to spin off the holding subsidiary Baowu carbon industry to be listed on the gem, and the issued shares shall not exceed 25% of the total share capital of the subsidiary. As of November 13, 2021, Baoshan Iron & Steel Co.Ltd(600019) directly held 71.78% equity of Baowu carbon industry. From 2019 to the first half of 2021, the net profits of Baowu carbon industry were RMB 339 million, RMB 87.93 million and RMB 523 million respectively. In November 2021, the company issued the plan for the listing of Baowu carbon industry. Before the issuance, the share capital of Baowu carbon industry was 750 million shares, and the number of shares issued accounted for no more than 25% of the total share capital of Baowu carbon industry after the issuance. The raised funds are preliminarily considered to be used for new carbon material projects, phthalic anhydride projects and supplementary working capital.
Profit forecast, valuation and rating: Baoshan Iron & Steel Co.Ltd(600019) as a leading enterprise in the iron and steel industry, silicon steel production capacity is gradually put into operation, the product structure is further optimized, the company’s bases continue to tap potential and reduce cost, and the profitability will continue to improve. We temporarily maintain the profit forecast of the company. It is estimated that the net profit from 2021 to 2023 will be RMB 27.125, 28.259 and 29.906 billion, corresponding to EPS of RMB 1.22, 1.27 and 1.34, maintaining the “overweight” rating.
Risk tip: the demand of manufacturing industry has dropped sharply; The profitability of Qingshan and Meishan bases fell.
