\u3000\u3 Jointo Energy Investment Co.Ltd.Hebei(000600) 507 Fangda Special Steel Technology Co.Ltd(600507) )
Event overview: on March 18, the company released its 2021 annual report: in 2021, the company realized a net profit attributable to the parent company of 2.732 billion yuan, a year-on-year increase of 27.6%; Net profit deducted from non parent company was 2.653 billion yuan, with a year-on-year increase of 29.2%. Quarter by quarter, in 2021q4, the company realized a net profit attributable to the parent company of 590 million yuan, a decrease of 11.1% compared with Q3, deducting a net profit not attributable to the parent company of 570 million yuan, a decrease of 14.1% compared with Q3.
Comments: the cost of raw materials rose sharply, and the gross profit margin fell by 2.72 PCT
① output: in 2021, the output of steel products decreased by 0.50% year-on-year, and the output of iron concentrate increased slightly by 0.38% year-on-year. In 2021, the output of steel products (including automobile leaf springs) of the company was 4.4159 million tons, a year-on-year increase of – 0.50%, and the sales volume was 4.4208 million tons, a year-on-year increase of – 0.34%. Quarterly, the company achieved a sales volume of 1.2045 million tons of steel products in 2021q4, a month on month increase of Q3 + 3.82%. In terms of iron concentrate powder, the company produced 704800 tons of iron concentrate powder in 2021, a year-on-year increase of + 0.38%. However, since the company basically did not sell iron concentrate powder products in the fourth quarter, the sales volume of iron concentrate powder in 2021 was only 536400 tons, a year-on-year increase of – 23.97%, and the ending inventory of iron concentrate powder increased to 168400 tons.
② price: the cost of raw materials rose sharply, and the gross profit margin fell by 2.72 PCT in 2021. In 2021, the market price of iron ore was + 46.50%, the price of coke was + 46.14% and the price of scrap steel was + 29.90% year-on-year. It is estimated that the average selling price of the company’s steel products is 473562 yuan / ton, a year-on-year increase of + 31.66%, and the production cost per ton of steel is 387754 yuan / ton, a year-on-year increase of + 36.17%. The increase of steel price is significantly lower than that of raw materials. The gross profit margin of the company decreased by 2.72 PCT to 19.99% in 2021. Quarterly, it is estimated that the selling price of 2021q4 steel products of the company decreased by 6.91% month on month and the cost per ton of steel decreased by 8.66% month on month. However, since the company basically did not sell iron concentrate products in Q4 (the output of Q4 was 165600 tons), the gross profit margin of 2021q4 decreased by 1.55pct month on month to 16.43% month on month.
Future core focus
① the stock incentive plan lays the foundation for the long-term development of the company. In February 2022, the company announced the A-share restricted stock incentive plan (Draft). The company plans to grant 215590000 restricted shares to 1230 incentive objects, accounting for 10% of the total share capital of the company at the time of the announcement of the incentive plan, laying the foundation for the long-term development of the company.
② refined management promotes the company’s profit level per ton of steel to be in the forefront of the industry. With fine management as the main line, the company has outstanding cost competitiveness. The cost per ton of steel and the three fees per ton of steel are lower than those of its peers, which promotes the company’s profitability per ton of steel to be in the forefront of the industry.
③ high cash dividend returns to shareholders and enhances the attractiveness of the company’s value investment. The proposed profit distribution plan of the company in 2021 is: the company plans to distribute cash dividends of RMB 11.10 (including tax) to all shareholders for every 10 shares, with a total of RMB 2.393 billion (including tax), and the proportion of cash dividends reaches 87.60%. The company’s continuous high cash dividends bring rich returns to shareholders and enhance the attractiveness of the company’s value investment.
Investment suggestion: the company’s products have high brand awareness and market share in Jiangxi Province. Through fine management, the company’s profit level per ton of steel ranks in the forefront of the industry. We expect that the net profit attributable to the parent company from 2022 to 2024 will be RMB 3.053/34.33/3.752 billion, corresponding to the closing price of RMB 8.6 on March 18, 2022, and PE will be 6 / 5 / 5 times from 2022 to 2024. The company will be rated as “recommended” for the first time.
Risk tip: the demand for real estate steel has fallen precipitously; Steel prices fell sharply; The price of raw materials fluctuates greatly
