Hangxiao Steel Structure Co.Ltd(600477) (600477)
China’s first steel structure listed company with stable equity structure: the company was founded in 1985 and listed on the Shanghai Stock Exchange in 2003, becoming China’s first steel structure listed company. In 2010, the company established a real estate company to develop high-rise steel structure residential engineering development business. The company stripped the real estate company in 2020. In 2018, the company established Wanjun green construction, a service platform for upstream and downstream supply and demand enterprises of the building ecological chain. The company has stable equity structure and high shareholding concentration. The legal person, chairman and actual controller of the company is Shan yinmu, holding 905 million shares (by the end of the third quarter of 2021), accounting for 42.01% of the total share capital of the company.
Local policies continued to be issued, and the prefabricated construction industry still maintained rapid growth: in 2021, with the gradual implementation of the “14th five year plan” of various provinces and cities, the local governments of various provinces and cities successively issued supporting policies during the “14th five year plan” to support the implementation of prefabricated buildings and clarify the target of the proportion of prefabricated buildings in new buildings. Referring to the policy objectives, under the three assumptions of optimism / neutrality / pessimism, we predict that the scale of prefabricated construction industry will be 2677.3 billion yuan, 2028.3 billion yuan and 1493.6 billion yuan respectively in 2025, and the CAGR will be 14%, 8% and 2% respectively in 2020-2025. The prefabricated construction industry will continue to grow in the future.
The proportion of steel structure may increase significantly. The construction cost of prefabricated PC is lower than that of steel structure building, which is the mainstream of prefabricated building in China. However, steel structure building is the direction encouraged by the government, and the subsequent proportion may increase significantly. Under the three assumptions of optimism / neutrality / pessimism, we expect that the proportion of newly-built fabricated steel structure building area will increase to 45%, 40% and 35% respectively in 2025, corresponding to 500 million square meters, 370 million square meters and 260 million square meters of newly-built fabricated steel structure building area, and corresponding to the scale of fabricated steel structure building industry will be 1405.6 billion yuan, 958.8 billion yuan and 627.3 billion yuan respectively, From 2020 to 2025, CAGR will be 22%, 13% and 3% respectively.
Build an industrial service platform, and Wanjun green construction orders are rapidly increasing: in 2018, in order to open up the industrial chain in the construction field and cultivate new profit growth points, the company focused on building an Internet platform for upstream and downstream supply and demand enterprises in the construction ecological chain, Wanjun green construction. From 2020q2 to 2021q3, the newly signed contract amount of Wanjun green construction fluctuated slightly in the quarter, but maintained a rapid growth trend on the whole. The amount of new orders signed by Wanjun green construction in the first three quarters of 2021 has reached 3.078 billion yuan, a year-on-year increase of 96.69%.
Profit forecast, valuation and rating: we are optimistic about the company’s competitive advantage in the main business of steel structure and the rapid development of Wanjun green construction service platform, which will bring new revenue growth points to the company. We predict that the net profit attributable to the parent company from 2021 to 2023 will be RMB 473 million, RMB 584 million and RMB 799 million respectively, and the current price corresponds to the dynamic P / E ratio of 2021 of 20x, which is rated as “overweight” for the first time.
Risk tip: the downstream steel structure demand is less than the expected risk, the upstream steel price rises sharply, the order execution is less than the expected risk, and the production capacity construction progress is less than the expected risk.
