\u3000\u3 Jointo Energy Investment Co.Ltd.Hebei(000600) 507 Fangda Special Steel Technology Co.Ltd(600507) )
Fangda Special Steel Technology Co.Ltd(600507) : high quality private enterprise, industry benchmark. The company Fangda Special Steel Technology Co.Ltd(600507) is a leading private iron and steel enterprise in Jiangxi. Its main products are threaded steel, automobile leaf spring, spring flat steel, etc. In 2009, the company completed the transformation from state-owned to private enterprises. The company’s product structure is dominated by long materials and is based in Nanchang, Jiangxi Province. The company has excellent management level and stable profitability, and can always maintain excellent performance when the profit of the iron and steel industry fluctuates greatly.
Iron and steel industry: supply and demand are flat and profits are maintained. In 2022, the supply and demand of the iron and steel industry was basically stable: the output continued to be controlled horizontally, the demand still increased by 1-3% year-on-year, and the tight supply and demand situation remained. There is a large expectation difference in steel demand in 2022: the market is generally bearish on real estate, but we believe that the demand of most steel industries except real estate will increase. We expect that the steel consumption in the downstream (container, shipbuilding, energy pipeline, chemical industry, special machinery, general machinery, mechanical parts, etc.) accounting for 1 / 3 of the later cycle will increase more significantly, accounting for about 2% of the infrastructure demand accounting for nearly 1 / 4. In 2022, the global iron ore supply is expected to increase by 100150 million tons, the ore price will weaken, and the proportion of steel in the industrial chain profit will further increase. We expect the average ore price to decline by 15.9% in 2022. We expect that in 2022, the average steel price will decrease by 278 yuan / ton, the cost will decrease by 343 yuan / ton, and the gross profit of the industry will be flat or slightly increased.
The management advantage is obvious, and the equity incentive regenerates vitality. Under the differentiated core cost strategy, Fangda Special Steel Technology Co.Ltd(600507) by controlling the cost of non raw materials such as labor, depreciation, energy and manufacturing expenses, improve labor productivity and reduce the total internal cost. According to the newly disclosed 2021 annual report, the roe of Fangda Special Steel Technology Co.Ltd(600507) in 2021 reached 28.9%, and it has been in the leading position in the industry for the decade from 2011 to 2020, and has basically maintained a high roe of more than 20%. In addition, Fangda Special Steel Technology Co.Ltd(600507) since its listing, it has launched three equity incentive plans, including the stock option plan in 2012 and 2017 and the restricted stock incentive plan in 2021.
Strong profit, high dividend, value investment model For Fangda Special Steel Technology Co.Ltd(600507) years, it has maintained a high dividend frequency and high dividend yield, which has brought a high return on investment to investors. From 2020 to 2021, the dividend payment rate of Fangda Special Steel Technology Co.Ltd(600507) company is as high as 110% and 88%, and the dividend rate is 15.9% and 14.2% respectively. Such a high dividend rate is also rare in the industry.
The external steel assets are huge, and the future increment can be expected. Dongfang iron and Steel Group, the controlling shareholder of the listed company, will participate in the acquisition of Pinggang shares as a transition and promise to succeed in the acquisition. When the time is ripe, it will inject Fangda Special Steel Technology Co.Ltd(600507) . As one of the three major iron and steel plants in Jiangxi, Pinggang will still give the company growth in the future.
Profit forecast and investment rating: considering the flat supply and demand of the industry, sustained profitability and the company’s management advantages, we predict that the company’s revenue from 2022 to 2024 will be 23.9/24/24.3 billion yuan respectively, with a year-on-year growth rate of 10% / 1% / 1% respectively; The net profit attributable to the parent company was 3.1/3.2/3 billion yuan respectively, with a year-on-year increase of 14% / 4% / 3% respectively; The corresponding PE is 6.0 / 5.8 / 5.6x respectively. Although the company’s valuation is slightly higher than the average value of comparable companies, the roe and dividend yield of the company are significantly higher than those of its peers, so the company is given a “buy” rating for the first time.
Risk tips: the demand is less than expected, the price of raw materials fluctuates, and the company’s own business risks
