\u3000\u3 Jointo Energy Investment Co.Ltd.Hebei(000600) 399 Fushun Special Steel Co.Ltd(600399) )
Event overview: on March 30, the company released its 2021 annual report: in 2021, the company realized a net profit attributable to the parent company of 783 million yuan, a year-on-year increase of 42%; Net profit deducted from non parent company was 685 million yuan, with a year-on-year increase of 34.3%. Quarterly, in 2021q4, the company realized a net profit attributable to the parent company of 98 million yuan, a year-on-year decrease of 33.2% and a month on month decrease of 61.3%; Net profit deducted from non parent company was 55 million yuan, a year-on-year decrease of 63.8% and a month on month decrease of 75.3%.
Comments: the contribution of superalloys has increased, and the rise in raw material prices has dragged down the company’s gross profit margin
① output: the output of steel increased by 9.12% year-on-year, of which the output of Superalloy increased by 7.16%. In 2021, the company achieved a steel output of 550600 tons, a year-on-year increase of + 9.12%, and a sales volume of 540000 tons, a year-on-year increase of + 7.81%. Structurally, the output of superalloys was 5900 tons, a year-on-year increase of + 7.16%; The output of stainless steel was 81900 tons, a year-on-year increase of + 31.11%; The output of tool steel was 72800 tons, a year-on-year increase of + 16.15%, and the output of alloy structural steel was 314800 tons, a year-on-year increase of – 1.49%. The company made a significant contribution to the performance of superalloys, and the proportion of gross profit increased by 3.55 PCT year-on-year to 37.93%.
② price: the cost of raw materials rose, and the gross profit margin fell by 1.89pct in 2021. In 2021, the company’s alloy structural steel price was + 15.5%, tool steel price was + 6.5%, stainless steel price was + 8.7%, and superalloy price was + 8.8%. In 2021, the main raw materials rose significantly, including the market price of scrap steel + 32.5%, nickel + 26.0% and cobalt + 41.6% year-on-year, which was significantly higher than the increase in the price of the company’s main products, resulting in the overall gross profit margin of the company falling by 1.89pct to 20.10% in 2021.
③ in a single quarter, the net profit attributable to the parent company of 2021q4 was 98 million yuan, a decrease of 61.3% month on month. The month on month decrease of 2021q4 performance mainly comes from gross profit (- 143 million yuan) and asset impairment loss (- 88 million yuan). The decrease of gross profit is mainly due to the rise of raw material cost and the month on month decline of product price.
Future core focus
① the future contribution of Superalloy field can be expected. Superalloys make a great contribution to the company’s gross profit. In 2021, the company’s gross profit margin of superalloys reached 42.65%, which is the only business in which the company’s gross profit margin increased. In 2021, the contribution of superalloys to the company’s gross profit increased by 3.55 PCT to 37.93%. The demand growth in military and other fields is expected to drive the sales of Superalloy products and thicken the company’s performance.
② the newly increased production capacity of 124000 tons planned in the early stage is steadily advancing. A number of technical transformation projects planned by the company in the early stage are in transit, with a new production capacity of 124000 tons steadily advancing, and the product structure is expected to further change to high-end.
③ for the overweight technical transformation project, the company’s production capacity is expected to accelerate the expansion in the next two years. In order to further improve the company’s product delivery capacity and product quality, the company continues to invest in relevant technological transformation projects, and the relevant production capacity will be increased by more than 250000 tons in the next two years, which is expected to continue to improve the company’s market competitiveness and industry influence abroad.
Investment suggestion: the company focuses on the development of products in the fields of national defense, military industry, aerospace and so on. With the gradual production of multiple technical transformation projects, the company’s product structure is further optimized to drive the release of performance. We expect that the net profit attributable to the parent company from 2022 to 2024 will be RMB 1.022/1.389/1.904 billion, corresponding to the closing price of RMB 14.73 on March 31, 2022, and PE will be 28 / 21 / 15 times from 2022 to 2024, maintaining the rating of “prudent recommendation” of the company.
Risk warning: downstream demand is less than expected; The price rise of raw materials exceeded expectations; The project is not progressing as expected.
